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The  Primer  Of 


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UNIVERSITY  OF  CALIFORNIA 
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IN   MEMORIAM 
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THE  PRIMER 


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Political  Economy-, 


IN  SIXTEEN  BEFIMTIOSS  AND  FOETl'  PCOPOSITIONS. 


BT 


ALFRED  B.  MASON  AXD  JOHN  J.  LALOB. 


'       •    •       »    ^ 


CHICAGO: 

JANSEN,  MCCLURG  &  COMPANY. 

1875. 


Copyright,  1875, 
By  JANSEN,  MCCLURG  &  CO. 


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l^  PREFACE, 


This  little  book  makes  no  claim  beyond  that  expressed 
in  its  title.     It  is  simply  a  Primer.     We  have  written  it 
in  the  hope  that  it  may  be  used  as  a  text-book  in  the 
common  schools  of  the  country.     The  time  that  can  be 
allotted    to    the    study   of   political    economy    in    these 
schools  does  not  exceed  a  term  or  two ;  and  the  ordi- 
A     nary  text-books  are  far  too  large  to  be  even  superficially 
■^     mastered  within  that  time.    The  Primer,  on  the  contrary, 
can    be    thoroughly   learned    without  any  undue  inter- 
"^     ference    with    the    other    studies  of   the   course.      The 
■^    experience  of  one  of  the  authors  in  teaching  political 
J    economy,  for  several  years,  to  boys  and  girls  has  con- 
.^    vinced  us  that  the  arrangement  by  definitions  and  propo- 
sitions which  we  have  adopted  is  the  best  for  the  purpose 
here  indicated.     Especial  prominence  has  been  given  to 
the  more  practical  applications  of  the  science.      The 
pages  devoted  to  cooperation  are  the  result  of  personal 
study  of  the  subject  in  England  and  Germany.     While 
the  Primer  is  designed  for  use  as  a  text-book,  we  trust 
that  persons  out  of  school  may  read  it  with  some  pleas- 
ure and  profit. 

The  standard  English,  French,  German  and  American 
works  on  political  economy  have  been  freely  consulted  in 
the  preparation  of  the  book.  We  have  aimed  to  give,  in 
simple  words   and   with    copious  illustration,  the  well- 

218206 


'I' 


4  PREFACE. 

settled  doctrines  of  the  fascinating  science.  The  dis- 
tinction between  the  real  and  the  possible  wage-fund  has 
not,  we  believe,  been  stated  before.  It  may  serve  to 
reconcile  opposing  theories  on  the  wage-fund  question. 
With  this  exception,  the  Primer  contains  only  old  truths 
in  new  forms.  A  few  pages  in  it  are  transcripts,  more 
or  less  exact,  from  articles  written  by  the  authors  for 
the  Chicago  Tribu7ie. 

The  experience  in  teaching  political  economy  already 
referred  to  is  our  excuse  for  a  word  of  suggestion.  The 
scholar  should  be  required  to  give  the  definitions  and  the 
captions  of  the  propositions  zr;7^a//;«,  but  mere  memoriz- 
ing should  not  be  carried  beyond  this.  It  is  far  better 
that  the  explanation  of  the  one  and  the  proof  of  the 
other  should  be  in  the  pupil's  own  words.  One  of  the 
best  tests  of  knowledge  is  to  ask  for  original  illustrations. 

ALFRED  B.  MASON. 

JOHN  J.  LALOR. 
Chicago,  June,  1875- 


TABLE    OF   CONTENTS. 


Definition  /.  Political  Economy  is  the  science  which  teaches 
the  laws  that  regulate  the  production,  distribution  and 
exchange  of  wealth, 9 

Definition  2.  Wealth  is  anything  lor  which  something  can 
be  got  in  exchange, 9 

Definition  j.    A  commodity  is  wealth  in  tangible  form,      .     .   10 

Definition  4.    Capital  is  wealth  saved,  and  used  in  production,   10 

Proposition  I.  To  produce  wealth,  three  things  are  re- 
quired,—  natural  agents,  capital  and  labor, 10 

Proposition  II.  Natural  agents  which  are  limited  in  quan- 
tity-, are  wealth;  and  those  which  are  practically  unlim- 
ited, are  not  wealth, 11 

Definition  5.    Capital  is  divided  into  fixed  and  circulating,      .  12 

Proposition  III.  The  proportion  of  fixed  to  circulating 
-capital  depends  upon  the  way  in  which  capital  is  used,       .   13 

Proposition  IV.  The  stock  of  capital  is  kept  up  by  con- 
stant reproduction, 14 

Proposition  \'.  The  amount  of  capital  used,  measures  the 
amount  of  labor  employed, 15 

Definition  6.  Demand  for  a  thing  consists  of  desire  to  buy 
it,  on  the  part  of  persons  wlio  have  something  to  give  in 
exchange  for  it,        16 


'»^ 


Definition  7.  Supply  of  a  thing  consists  of  desire  to  sell  it, 
on  the  part  of  persons  who  possess  it, 16 

Proposition  VI.  Supply  in  excess  of  demand  causies  prices 
to  fall ;  and  demand  in  excess  of  supply  causes  prices  to 
rise, 16 

Proposition  VII.  A  demand  for  a  thing  tends  to  produce 
a  supplv  of  that  thing  at  a  fair  price, 17 

(5) 


6  TABLE   OF  CONTENTS. 

Definition  8.    Consumption  is  productive  or  unproductive,     .   i8 

Proposition  VIII.    Productive  consumption  benefits  labor,  i8 

Proposition  IX.    Unproductive  consumption  hurts  labor,  .   19 

Proposition  X.  The  division  of  labor  increases  its  ef- 
ficiency,       20 

Definition  g.  The  part  of  capital  which  is,  or  might  be,  used 
to  pay  labor  is  called  the  wage-fund, 22 

Proposition  XI.  The  possible  wage-fund  varies  with  pro- 
duction,        23 

Pr<jI'Osition  XII.  The  real  wage-fund  varies  according  to 
the  first  law  of  supply  and  demand, 23 

Proposition  XIII.  Wages  are  lower  in  an  agreeable  than 
in  a  disagreeable,  in  an  easily-learned  than  in  a  difficult, 
and  in  a  steady  than  in  an  unsteady,  employment,    ...  24 

Proposition  XIV.  The  average  wage  of  labor  is  equal  to 
the  quotient  got  by  dividing  the  real  wage-fund  by  the 
number  of  persons  employed,       25 

Proposition  XV.  The  test  of  the  highness  of  wages  is  their 
purchasing  power,        26 

Proposition  XVI.  Wages  can  be  raised  only  by  increasing 
the  real  wage-fund  or  by  lessening  the  number  of  persons 
employed, 26 

Proposition  XVII.  The  use  of  labor-saving  machinery 
benefits  labor, 29 

Proposition  XVIII.    High  wages  often  make  high  profits,  31 

Definition  10.  A  strike  is  a  conspiracy  of  employees  against 
emplovers,  by  w  hich  the  former  refuse  to  work  unless  the 
latter  yield  to  their  wishes, 34 

Definition  11.  A  lock-out  is  a  conspiracy  of  employers  against 
employees,  by  which  the  former  refuse  to  give  the  latter 
work  unless  the  employees  yield  to  their  wishes,       ...  34 

PRf)POSiTiON  XIX.    It  is  bad  policy  to  strike, 34 

pROPf)SiTioN  .XX.  It  is  to  the  advantage  of  both  employers 
and  employees  to  settle  their  disputes  by  arbitration,     .     .  37 

Proposition  XXI.  The  best  way  to  produce  wealth  is  by 
co-operation, 38 

Proposition  XXII.  Trade-union  funds  can  be  best  used 
in  promoting  co-operation, 45 


TABLE   OF  CONTENTS.  7 

Proposition  XXIII.  Wealth,  when  produced,  is  divided 
into  rent,  profits  and  wages, 46 

Proposition  XXIV.  Wealth  is  sometimes  shared  between 
three  classes,  and  sometimes  between  two,  and  is  some- 
times absorbed  by  one, 47 

Proposition  XXV.  The  first  law  of  supply  and  demand 
fixes  the  proportion  of  rent,  profits  and  wages  to  each 
other,      .  48 

Definition  12.    Value  is  purchasing  power, 12 

Definition  ij.    Price  is  value  expressed  in  money,      ....  49 

Proposition  XX\'I.  There  cannot  be  a  general  rise  or  fall 
in  values, 49 

Proposition  XXVII.  There  may  be  a  general  rise  or  fall 
in  prices, 50 

Proposition  XXVIII.  The  value  of  a  thing  depends  upon 
the  cost  of  its  production, 50 

Proposition  XXIX.  In  every  fair  bargain,  both  parties 
gain, 51 

Proposition  XXX.  The  first  method  of  exchange,  barter, 
is  unfit  for  use  in  a  civilized  community, 52 

Proposition  XXXI.  The  great  instrument  of  exchange  is 
money, 53 

Proposition  XXXII.    Money  is  the  measure  of  values,      .  53 

Proposition  XXXIII.  Money  in  specie  is  like  all  other 
commodities,        54 

Proposition  XXXIV.  Gold  and  silver  make  the  best 
money, 55 

Proposition  XXXV.  Paper  money,  not  convertible  into 
specie  at  par,  is  an  evil, 56 

Proposition  XXXVI.  The  worse  currency  drives  out  the 
better, 58 

Proposition  XXXVII.    Credit  is  not  capital, 59 

Proposition  XXXVIII.  A  commercial  crisis  is  caused  by 
the  destruction,  that  is,  the  unproductive  consumption,  of 
wealth, 60 

Proposition  XXXIX.  The  eflfects  of  a  commercial  crisis 
can  be  removed  only  by  the  production  of  wealth,    ...  63 


8  TABLE   OF  CONTENTS. 

DrfiiiHion  14.    A  tax  is  a  sum  of  money  collected  by  a  govern- 
ment from  persons  or  property  within  its  dominions,  .  63 

Definition  ij.    Duties  are  taxes  on  imported  goods,  that  is,  on 
goods  brought  from  other  countries, 63 

Definition  r6.    A  tarifl'  is  a  law  fixing  duties, 63 

Proposition  XL.    A  tariff  should  be  for  revenue  alone,      .  64 


The  PrimiiR  of  Political  EconoiMY. 


DEFINITION  I.  Political  Economy  is  the  science  which 
teaches  the  laivs  that  regulate  the  production,  distribution 
and  exchange  of  luealth. 

Everything  in  this  world  is  governed  by  law.  Human  laws 
are  those  made  by  men.  All  others  are  natural  laws.  A  law 
providing  lor  the  education  of  children  in  schools  is  a  human 
law.  The  law  that  children  shall  keep  growing,  if  tliey  live, 
until  they  are  men  or  women,  and  shall  then  slowly  decay  and  at 
last  die,  is  a  natural  law.  An  apple  falls  from  a  tree  and  the 
earth  moves  around  the  sun  in  obedience  to  natural  laws.  The 
laws  which  regulate  the  production,  distribution  and  exchange 
of  wealtli  are  of  both  kinds.  The  more  important  ones,  how- 
ever, are  natural. 

DEFINITION   2.     Wealth  is  anythitig  for  which  some- 
thing can  be  got  in  exchange. 

Many  useful  things  are  not  wealth.  Air  is  one  of  the  most 
useful  things  in  tlie  world.  A  person  deprived  of  it  would  die. 
Water  is  a  very  useful  thing,  too.  But  air  and  water  are  not 
Avealth,  because  they  can  be  got  witliout  giving  an\  thing  in  ex- 
change for  them.  Sometimes,  however,  each  of  them  may  be 
wealth.  If  a  man  had  to  live  in  a  diving-bell,  he  would  have  to 
pay  in  some  way  for  the  air  sent  down  in  pipes  for  him  to 
breathe.  In  a  desert,  a  little  bottle  of  water  will  sell  for  a  good 
deal.  Men  sometimes  pay  for  the  right  to  use  the  Avatcr  of  a 
stream  to  turn  a  mill-wheel.  In  these  cases,  the  air  and  the 
water  ai'e  wealth,  because  something  can  be  got  in  exchange  for 
them. 

In  order  to  tell  whetlicr  or  not  anv  particular  thing  is  wealth, 
we  must  ask,  "Can  something  be  got  in  exchange  for  it.'"  If 
something  can,  then  it  is  wealth. 

A  coat  is  wealth.  So  are  houses,  corn,  diamonds,  a  doctor's 
skill,  money,  shovels,  the  ability  to  make  furniture,  furniture 
itself,  bricks  and  thousands  of  other  things. 

(9) 


10  PRIMER  OF  POLITICAL  ECONOMT. 


DEFINITION    3.     A   commodity  is    ivealih   in    tangible 

form. 

The  list  just  given  of  things  that  are  wealth  contains  some 
things  tliat  arc  commodities  and  some  that  are  not. 

A  coal,  a  house,  corn,  a  diamond,  money,  a  shovel,  furniture 
and  a  brick  are  commodities,  because  they  are  wealth  in  a  form 
which  can  be  touched. 

A  doctor's  skill  and  the  ability  to  make  furniture  cannot  be 
touciied.  Therefore  they  are  not  commodities,  although  they 
are  wealtii. 


DEFINITION  4.   Capital  is  wealth  saved,  and  used  in 

production. 

It  is  important  to  remember  that  capital  is  wealth  that  is  (i) 
saved,  and  (2)  used  in  production.  Land  is  wealth,  but  it  is  not 
cajiitai,  because,  although  it  is  used  to  produce  crops,  nobody 
has  saved  it.  So  $10,000  in  money  locked  up  in  a  safe  is  wealth, 
but  it  IS  not  capital,  because,  although  somebody  has  saved  it, 
it  is  not  used  to  i^roduce  more  wealth. 

Food  eaten  b^-  men  who  work  is  capital.  Money  iised  to  pay 
the  wages  of  workmen  is  caj^ital.     Tools  are  cajiital. 

Land  is  a  natural  agent,  like  water,  air,  the  force  of  gravita- 
tion, etc.     It  is  tiie  most  important  of  ull  the  natural  agents. 


PROPOSITION  I. 

To   produce    wealth,    three    things    are    required, —  natural 
agents,  capital,  and  labor. 

The  production  of  vegetable  food  needs,  first,  a  natu- 
ral agent  in  the  shape  of  the  land  on  which  the  food 
grows ;  second,  the  labor  of  clearing,  fencing,  plowing, 
digging  and  planting  the  land  and  of  gathering  the  crops, 
and  periiaps,  as  in  the  case  of  wheat,  the  labor  of  grind- 
ing the  grain  into  flour  and  of  cooking  it  afterwards; 
and,  third,  ca])ital  in  the  shape  of  the  tools  used  in  all 
tliese  occupations,  the  seed  employed  in  planting,  the 
clothing  and  the  food  consumed  by  the  laborers,  etc. 

In  the  production  of  a  doctor's  skill,  the  principal 
natural    agent  is   again  the    land.      This  has  produced 


PRIMER  OF  POLITICAL  ECONOMT  11 

most  of  the  food  which  the  body  must  consume  in  order 
to  exist  wiiile  the  mind  gains  the  required  skill.  The 
capital  is  the  food  and  clothing  consumed  by  the  doctor 
while  studying,  the  cost  of  providing  him  with  slielter, 
and  the  money  paid  for  his  tuition.  The  labor  is  that 
spent  in  teaching  him  and  in  caring  for  him  from  the  day 
of  his  birth. 

In  the  production  of  linen,  the  natural  agents  directly 
at  work  are  the  land  on  which  the  manufactory  stands 
and  on  which  the  raw  material  (flax)  grew  and  the  power 
which  makes  the  machinery  go.  This  power  may  be  the 
air,  turning  a  windmill ;  or  heat,  acting  on  water  in  a 
boiler  and  so  creating  steam;  or  water,  turning  a  water- 
wheel.  The  labor  is  that  spent  in  raising  the  flax  and 
that  of  the  men,  women  and  children  who  spin  thread 
from  the  flax  and  weave  the  thread  into  linen  cloth,  and 
also  that  of  the  persons  who  built  the  manufactory  and 
invented  and  made  the  machinery,  and,  again,  that  of  the 
persons  who  now  manage  the  works.  The  capital  con- 
sists of  the  building,  the  machinery,  the  money  used  in 
paying  wages,  the  flax  consumed,  etc. 

Thus,  in  these  three  very  different  cases,  the  produc- 
tion of  wealth  requires  natural  agents,  capital,  and  labor. 
No  case  of  production  can  be  imagined  in  which  these 
three  forces  do  not  combine.  But  a  law  to  which  no 
exception  can  be  found  may  be  taken  as  true. 

Therefore,  to  produce  wealth,  three  things  are  re- 
quired,—  natural  agents,  capital,  and  labor. 

PROPOSITION    II. 

Natural  agents  which  are  limited  in  quantity,  are  wealth ;  and 
those  which  are  practically  unlimited,  are  not  wealth. 

If  anything  is  unlimited  in  quantity,  anyone  who 
wishes  it  can  get  it.  Air  is  an  example.  Everybody 
can  get  it  free,  and  therefore  nobody  will  give  anything 
in  exchange  for  it.  But  if  a  person  could  get  control  of 
all   the  air  and  take  it  away  from  everybody  else,  he 


12  PRIMER  OF  POLITICAL  ECONOMT. 

could  get  a  great  deal  in  exchange  for  it,  because  people 
would  have  to  have  it  or  die.  Therefore,  if  air  were 
limited  in  quantity,  it  would  be  wealth. 

In  thickly-settled  countries,  land  is  strictly  limited  in 
quantity ;  none  of  it  is  left  unowned,  and  therefore  none 
of  it  can  be  got  free.  Every  acre  of  it  is  wealth.  Some- 
thing can  be  got  in  exchange  for  it.  In  unsettled  coun- 
tries, however,  land  is  practically  unlimited  in  quantity. 
That  is,  there  is  more  of  it  there  than  anybody  wants. 
A  man  who  owned  one  of  a  hundred  similar  islands  near 
the  North  Pole  could  not  exchange  it  for  anything,  be- 
cause anyone  who  wnshed  an  island  in  that  neighborhood 
could  get  another  as  good  as  this  for  nothing. 

Water  is  usually  practically  unlimited  in  quantity. 
Two  cases  have  been  mentioned  (see  explanation  of  Def. 
2)  in  which  water  is  limited  in  quantity.  In  both  these 
cases,  something  can  be  got  in  exchange  for  it.  There- 
fore, when  limited,  it  is  wealth. 

We  see,  then,  that  the  same  natural  agent  is  some- 
times wealth  and  sometimes  not  wealth,  according  as  it 
is  limited  or  unlimited  in  quantity. 

Therefore,  natural  agents  which  are  limited  in  quantity 
are  wealth,  and  those  which  are  practically  unlimited  are 
not  wealth. 

DEFINITION  5.    Capital  is  divided  into  fixed  and  cir- 
culating. 

Capital  is  used  in  two  ways.  It  \'^  fixed  in  buildiijgs,  machin- 
ery, tools,  the  permanent  improvements  of  land  (such  as  drain- 
age), canals,  railroads,  etc.  It  circulates  when  used  in  paying 
wages,  buying  raw  material  (like  flax  for  the  manufacture  of 
hnen),  etc. 

Fixed  capital  lasts  a  long  time.  The  things  produced  by  its 
aid  use  up  only  a  small  part  of  it,  year  after  year.  If  a  manu- 
facturer of  linen  has  a  buiiding,  machinery,  etc.,  this  fixed  capi- 
tal can  be  employed  in  the  manufacture  of  very  many  thousand 
yards  of  linen  before  it  is  worn  out.  Still,  the  production  of 
each  yard  wears  out  the  works  a  very  little. 

Circulating  capital  is  all  used  up  by  being  used  once.  When 
the  manufacturer  produces  a  yard  of  linen,  he  has  entirely  parted 


PRIMER  OF  POLITICAL  ECONOMY.  13 

•with  the  flax  in  it  and  with  the  labor  spent  upon  the  flax.  When 
he  sells  the  piece  of  cloth,  he  must  get  enough  tor  it  to  replace 
all  he  has  spent  tor  these  two  things  and  to  pay  tor  the  part  of 
his  fixed  capital  which  has  been  used  up  in  the  manufacture, 
and,  if  possible,  to  yield  him  a  profit. 

Thus  the  product  must  repay  all  the  circulating  capital  and 
fart  of  the  fixed  capital  used  in  its  production. 

A  crop  of  corn,  in  order  to  give  the  farmer  a  profit,  must  sell 
for  more  than  the  cost  of  the  seed  sown  and  the  labor  spent  in 
preparing  the  ground  and  in  sowing  and  gathering  the  grain, 
fills  an  amount  equal  to  the  harm  done  to  the  fencing,  drain- 
age, etc. 


PROPOSITION    III. 

The  proportion  of  fixed  to  circulating  capital  depends  upon 
the  way  in  which  capital  is  used. 

If  a  shirt-manufacturer  hires  a  number  of  women  to 
sew  for  him  at  their  homes,  his  capital  is  almost  entirely 
circulating.  He  uses  nearly  all  of  it  in  buying  cloth, 
thread,  buttons,  etc.,  and  in  paying  wages.  If  he  builds 
a  large  manufactory  and  stocks  it  with  machinery  and 
has  his  employes  work  there,  a  much  larger  part  of  his 
capital  becomes  fixed. 

A  very  large  proportion  of  the  capital  of  a  railway 
company  is  fi.xed  in  the  shape  of  roadbed,  rails,  cars, 
locomotives,  car-shops  and  stations.  A  very  small  part 
of  the  capital  of  a  dealer  in  coal  is  fixed.  He  needs  only 
a  yard  in  which  to  store  his  stock,  a  few  teams  and  a 
small  office.  His  main  use  for  his  capital  is  in  buying 
coal  at  the  mines,  defraying  the  cost  of  its  transportation 
and  paying  the  wages  of  his  employes. 

A  similar  analysis  of  any  other  business  would  show 
that  the  capital  used  in  it  was  divided  into  fixed  and 
circulating,  according  to  the  nature  of  the  particular 
industry. 

Therefore,  the  proportion  of  fixed  to  circulating  capi- 
tal depends  upon  the  way  in  which  capital  is  used. 


14  PRIMER  OF  POLITICAL  ECONOMY. 

PROPOSITION    IV. 

The  stock  of  capital  is  kept  up  by  constant  reproduction. 

The  definition  of  capital  (Def.  4)  shows  that  it  must  be 
used  in  order  to  be  capital.  Using  it  destroys  it.  This 
is  true  of  both  circulating  and  fixed  capital. 

When  a  yard  of  linen  is  manufactured,  the  flax  in  it, 
as  flax,  no  longer  exists.  The  food  consumed  by  the 
workmen  who  made  it  no  longer  exists.  The  flax  and 
the  food  are  circulating  capital.  Using  them  has  de- 
stroyed them. 

A  building,  which  is  fixed  capital,  is  not  used  up  by 
being  used  once,  but  it  is  gradually  worn  out  by  use.  It 
has  to  be  repaired  constantly.  If  the  repairs  are  neg- 
lected, it  finally  tumbles  down. 

The  only  difference,  in  this  respect,  between  fixed  and 
circulating  capital  is,  that  the  first  is  destroyed  bit  by  bit 
w  henever  it  is  used,  while  the  second  is  entirely  destroyed 
whenever  it  is  used.  A  spade,  which  is  fixed  capital, 
may  be  used  to  dig  a  great  many  potatoes  out  of  the 
ground,  but  part  of  it  is  worn  away  each  time.  A  potato, 
which  is  circulating  capital,  can  be  used  only  once,  and 
then  it  is  wholly  consumed. 

Now  if  the  yard  of  linen  is  not  worth  more  than  all 
the  capital  destroyed  in  making  it,  the  world's  stock  of 
capital  is  less  than  it  would  have  been  had  the  linen  not 
been  made.  But  if  the  linen  is  worth  more  than  all  the 
capital  destroyed  in  making  it,  then  the  capital  has  been 
more  than  reproduced,  and  the  world's  stock  of  it  has 
been  increased. 

As  capital  must  (Def.  4)  be  used  in  production,  and  as 
using  it  always  destroys  it,  it  is  evident  that  the  only  way 
to  keep  up  the  stock  of  capital  is  to  use  it  so  that  it  will 
produce,  by  the  time  it  is  destroyed,  at  least  an  equal 
amount  of  capital. 

Therefore,  the  stock  of  capital  is  kept  up  by  constant 
reproduction. 


PRIMER  OF  POLITICAL  ECONOMY.  15 


PROPOSITION   V. 

The  amount  of  capital  used,  measures  the  amount  of  labor 

employed. 

To  produce  wealth  (Prop.  I),  both  capital  and  labor 
are  required.  Therefore,  in  order  that  labor  may  be 
employed,  capital  must  be.  The  more  capital,  the  more 
labor.  For  capital  cannot  produce  wealth,  unless  labor 
works  with  it. 

The  reason  why  capital  measures  labor,  instead  of 
labor's  measuring  capital,  is,  that  the  capitalist  takes  the 
first  step  in  production  by  providing  buildings,  machin- 
ery, tools,  and  usually  raw  materials.  Then,  but  not  till 
then,  labor  takes  up  the  task.  Capital  must  act  first,  and 
labor  second.  Until  capital  acts,  labor  cannot.  There- 
fore, labor  has  to  wait  for  capital  to  begin,  and  is  de- 
pendent upon  cai)ital  for  employment. 

Labor  also  depends  upon  capital  for  support  while  be- 
ing employed.  The  capitalist  advances  to  the  laborer, 
in  the  shape  of  wages,  the  food,  clothing,  shelter,  etc., 
needed  by  the  latter,  and  finally  repays  himself  for  the 
advance  out  of  the  proceeds  of  the  wealth  the  laborer 
has  helped  to  produce.  A  manufacturer  of  jewelry,  for 
instance,  first  uses  his  capital  in  providing  a  suitable 
work-room  and  the  necessary  tools.  Then  he  buys  the 
needed  gold,  and  the  other  raw  materials.  Then  he 
hires  labor.  The  amount  of  labor  he  engages  must  de- 
pend upon  the  size  of  his  work-room,  the  number  of  his 
tools,  and  the  quantity  of  gold,  etc.,  which  he  has  to  be 
made  into  ornaments.  These  things  all  depend  upon  the 
amount  of  capital  he  has  invested.  Moreover,  before 
he  can  sell  anything,  it  must  be  manufactured.  While 
it  is  being  manufactured  he  must  pay  out  money  to  his 
workmen  without  getting  any  money  from  his  customers. 
In  order  to  do  this,  he  must  have  capital. 

Therefore,  since  labor  is  employed  by  capital,  and 
supported  by  capital,  the  amount  of  capital  used  meas- 
ures the  amount  of  labor  employed. 


16  PRIMER  OF  POLITICAL  ECONOMY. 


DEFINITION  6.  Demand  for  a  thing  consists  of  a 
desire  to  buy  it,  on  the  part  of  persons  who  have  some- 
thing to  give  in  exchange  for  it. 

DEFINITION   7.    Supply  of  a  thing  consists  of  a  desire 
to  sell  it,  on  the  part  of  persons  who  possess  it. 

Thus  a  demand  for  cotton  consists  of  the  desire  to  buy  cotton 
in  the  minds  of  persons  who  have  money  or  something  else  to 
give  in  exchange  for  the  cotton.  If  they  have  no  money  and  no 
purciiasing  power  in  any  other  form,  however  much  they  may 
want  cotton,  there  is  no  demand  for  it  in  the  politico-economical 
meaning  of  the  word. 

So  a  supply  of  •cotton  consists  of  a  desire  to  sell  cotton,  in  the 
minds  of  persons  who  have  cotton  to  give  in  exchange  for  money 
or  any  other  commodity. 

PROPOSITION   VI. 

Supply   in   excess   of    demand   causes   prices   to   fall,   and 
demand  in  excess  of  supply  causes  prices  to  rise. 

When  the  supply  of  anything  exceeds  the  demand  lor 
it,  each  person  who  wishes  to  sell  the  particular  thing 
will  be  afraid  that  his  stock  of  it  will  be  the  portion  of 
the  supply  which  the  demand  will  not  reach.  He  will, 
therefore,  put  down  his  prices  in  order  to  induce  buyers 
to  take  his  wares  instead  of  those  of  his  neighbor.  Each 
seller  will  do  this,  consequently  general  prices  will  fall. 
If  there  is  a  demand  for  nine  brooms,  and  a  supply  of 
ten,  each  broom-seller  will  fear  that  one  of  his  brooms 
will  be  left  on  his  hands.  To  prevent  this,  he  will  mark 
down  his  prices;  therefore,  brooms  will  be  cheaper. 
Hence,  greater  production  and  greater  cheapness  go 
hand  in  hand. 

When  demand  for  anything  exceeds  supply  of  it,  each 
person  who  wishes  to  buy  the  particular  thing  will  be 
afraid  that  the  whole  supply  of  it  will  be  absorbed  by 
other  buyers,  and  that  he  will  not  be  able  to  get  what  he 
wants.     He  will  therefore  offer  more  in  exchange  for  it, 


PRIMER  OF  POLITICAL   ECONOMV.  17 

in  order  to  induce  the  owner  to  sell  to  him  instead  of  to 
his  neighbor.  Each  buyer  will  do  this;  consequently, 
general  prices  will  rise.  If  five  persons  want  horses,  and 
there  are  only  four  horses  for  sale,  each  of  the  five  will  be 
willing  to  pay  something  extra  rather  than  not  have  any 
horse  at  all.  The  four  highest  bidders  will  get  the  four 
horses ;  therefore,  horses  will  be  dearer.  Hence,  scanty 
production  means  dear  goods. 

This  demonstration  proves  the  "first  law  of  demand 
and  supply.," — namely,  supply  in  excess  of  demand 
causes  prices  to  fall,  and  demand  in  excess  of  supply 
causes  prices  to  rise. 

PROPOSITION  VII. 

A  demand  for  a  thing  tends  to  produce  a  supply  of  that 
thing  at  a  fair  price. 

If  there  is  a  demand  for  anything,  it  will  pay  capital- 
ists to  use  their  capital  in  supplying  that  thing;  they 
will  therefore  do  so.  If  the  profits  they  make  are  very- 
large,  other  capitalists  will  be  tempted  to  go  into  the 
business.  Then  competition  between  the  manufacturers 
(Prop.  VI)  will  cut  down  the  price  of  the  article.  It 
will  not,  however,  cut  it  down,  except  temporarily,  below 
a  fair  price,  that  is,  a  price  which  will  pay  for  the  natural 
agents,  capital  and  labor  expended  upon  its  production. 
For  if  the  price  falls  below  this  limit,  capital  will  be 
withdrawn  from  the  industry.  This  will  diminish  the 
production.  The  resulting  scarcity  of  the  thing  (Prop. 
VI)  will  raise  its  price  again. 

In  1869  there  was  a  sort  of  mania  for  velocipedes. 
Many  boys  and  some  men  wanted  them.  This  created 
a  demand  for  velocipedes.  The  demand  was  at  first  in 
excess  of  the  supply;  prices  were  therefore  high.  A 
great  supply  of  velocipedes  followed ;  then  their  prices 
fell.  Pretty  soon  it  was  discovered  that  there  was  not 
much  amusement  after  all  in  riding  on  a  velocipede. 
The  demand  for  them  became  almost  nothing ;  their  man- 


18  PRIMER  OF  POLITICAL  ECONOMY. 

ufacture  stopped  almost  entirely.  lUit  there  was  a  great 
stock,  of  them  on  hand  ;  they  were  therefore  sold  for  very 
small  prices.  Now  there  is  a  little  demand  for  velocipedes 
for  children,  and  these  can  be  bought  at  a  fair  price. 

In  the  case  of  things, —  such  as  the  paintings  of  a  dead 
artist, —  which  are  strictly  limited  in  quantity,  demand 
cannot  produce  a  supply  at  a  fair  price,  because  the  ne- 
cessary supply  cannot  be  produced,  no  matter  how  much 
capital  and  labor  are  spent  in  the  effort.  But  in  the  case  of 
all  things  which  can  be  produced  in  any  quantity  —  that  is, 
in  the  case  of  nearly  everything —  this  proposition  applies. 

Hence,  we  have  the  "  second  law  of  supply  and  de- 
mand,"—  namely,  a  demand  for  a  thing  tends  to  produce 
a  supply  of  that  thing  at  a  fair  price. 

DEFINrriON  8.     Consumption  is  productive  or  unpro- 
ductive. 

Consumption  wliich  increases  tlie  productive  powers  of  the 
coininunity  is  productive.  Needed  food  eaten  by  a  man  who 
works  is  productively  consumed.  Tlie  iron  which  is  melted  and 
then  made  into  a  rail  which  is  afterwards  used,  is  productively 
consumed.     So  are  the  tiles  used  in  draining  a  farm. 

Consumption  which  does  not  increase  the  productive  powers 
of  the  cominunity  is  unproductive.  The  food  and  clothing  of  an 
idler  are  unproductively  consumed.  If  a  workingman,  who 
needs  only  a  pound  of  food  a  day,  eats  a  pound  and  a  half,  the 
extra  half-pound  is  unproductively  consumed.  Iron  melted  and 
flung  away  is  unproductively  consumed.  Silks,  velvets  and 
laces  are  usually  unproductively  consumed.     So  is  tobacco. 

PROPOSITION   VIII. 

Rroductive  consumption  benefits  labor. 

Productive  consumption  (see  explanation  of  Def.  8) 
increases  the  productive  powers  of  the  community.  In- 
creasing the  productive  powers  of  a  community  increases 
its  stock  of  wealth.  The  larger  this  is,  the  greater  is  apt 
to  be  the  capital  of  the  community.  And  if  more  capi- 
tal is  used,  more  labor  (Prop.  V)  is  employed.     Hence 


PRIMER  OF  POLITICAL  ECONOMT.  19 

productive  consumption  causes  a  greater  employment  of 
labor. 

Therefore  productive  consumption  benefits  labor. 

PROPOSITION   IX. 

Unproductive  consumption  hurts  labor. 

When  anything  is  consumed  without  increasing  the 
productive  powers  of  a  community,  that  community's 
stock  of  wealth  is  decreased  by  just  the  value  of  the 
thing  thus  consumed.  If  one  thousand  i)eople  each  eat 
one-fourth  of  a  pound  more  food  per  day  than  they  need, 
the  community's  stock  of  wealth  suffers  a  needless  loss 
of  two  hundred  and  fifty  pounds  of  food  a  day. 

Unproductive  consumption  decreases  a  community's 
stock  of  wealth.  If  a  country's  wealth  is  lessened,  the 
country's  capital  is  apt  to  be  less.  But  the  less  capital 
(Prop.  V),  the  less  labor. 

Suppose  a  man  pays  $250  a  year  for  food,  one-fifth  of 
which  he  does  not  need,  and  tlierefore  consumes  unpro- 
ductively.  If  he  stops  this  unproductive  consumption, 
the  capital  and  labor  employed  in  producing  the  ^50 
worth  of  food  now  wasted  will  be  used  in  producing 
something  else  for  which  there  is  a  demand,  say  shoes. 
The  man  will  have  the  $50  he  saves  every  year  to  use  in 
producing  a  third  thing,  say  books.  Then  the  com- 
munity will  still  have  all  the  food  it  needs,  and  will  have 
besides,  as  the  result  of  this  stoppage  of  unproductive 
consumption,  more  shoes  and  more  books,  of  neither  of 
which  did  it  have  enough  before. 

In  this  case,  the  price  of  food  remains  the  same,  be- 
cause the  demand  has  diminished  with  the  supply.  The 
prices  of  both  shoes  and  books  are  lower,  because  (Prop. 
VI)  the  supply  has  increased. 

There  7i.<as  only  one  fund  used  in  production,  that  is, 
in  hiring  labor.  This  was  the  fund  used  to  produce  the 
extra  food.  This  fund  still  exists,  and  is  used  to  produce 
shoes.     But  now  there  is  another  fund,  which  is  used  to 


20  PRIMER  OF  POL/TIC  A  L   ECONOMY. 

produce  books.     There  are,  therefore,  since  the  unpro- 
ductive consumption  ceased,  two  funds  used  in  hiring 
labor  where  there  was  only  one  before.     So  the  stop- 
page of  unproductive  consumption  has  benefited  labor. 
Therefore,  unproductive  consumption  hurts  labor. 

PROPOSITION   X. 

The  division  of  labor   increases   its  efficiency. 

It  would  be  a  waste  of  labor  and  time  for  the  farmer, 
after  having  harvested  his  wheat,  to  carry  it  to  the  mill, 
grind  it  himself  into  flour,  take  the  flour  to  the  city,  then 
bake  it  into  bread,  and  then  carry  the  loaf  around  in 
search  of  a  buyer  for  it.  The  farmer  knows  how  to  farm 
and  has  the  needed  tools.  He  does  not  know  how  to 
run  a  mill,  or  a  railroad,  or  a  bakery,  and  he  has  none  of 
the  necessary  machinery.  His  labor  can  therefore  be 
best  used  on  the  farm.  If  he  can  earn  $5  by  working 
five  days,  one  as  a  farmer,  one  as  a  miller,  one  as  a  car- 
rier, one  as  a  baker,  and  one  as  a  peddler,  his  labor  dur- 
ing the  same  five  days  on  the  farm  would  probably  be 
worth  two  or  three  times  that  sum.  Moreover,  if  he  con- 
fines himself  to  farming,  he  has  to  buy  only  one  set  of 
tools  and  can  keep  them  almost  constantly  in  use,  so  that 
his  capital  does  not  lie  idle.  If  he  pursued  five  trades, 
he  would  have  to  have  five  different  sets  of  tools,  and 
four  sets  would  have  to  lie  idle  all  the  while.  Therefore, 
both  capital  and  labor  can  be  best  employed  where  labor 
is  divided. 

This  is  true  also  within  the  limits  of  one  trade.  Adam 
Smith,  the  first  great  politico-economist,  gives  the  follow- 
ing illustration  of  the  efficiency  produced  by  the  division 
of  labor  :  "  The  business  of  making  a  pin  is  divided  into 
about  eighteen  distinct  operations.  One  man  draws  out 
the  wire,  another  straights  it,  a  third  cuts  it,  a  fourth 
points  it,  a  fifth  grinds  it  at  the  top  for  receiving  the 
head;  to  make  the  head  requires  two  or  three  distinct 
operations ;  to  put  it  on  is  a  peculiar  business ;  to  whiten 


PRIMER  OF  POLITICAL   ECONOMY.  21 

the  pins  is  another;  it  is  even  a  trade  by  itself  to  put 
them  into  the  i)aper.  I  have  seen  a  small  manufactory 
where  ten  men  only  were  employed,  and  where  some  of 
them  consequently  performed  two  or  three  distinct  op- 
erations. But  though  they  were  very  poor,  and  therefore 
but  indifferently  accommodated  with  the  necessary  ma- 
chinery, they  could,  when  they  exerted  themselves,  make 
among  them  about  twelve  pounds  of  pins  in  a  day. 
There  are  in  a  pound  upwards  of  four  thousand  pins  of 
a  middling  size.  Those  ten  persons,  therefore,  could 
make  among  them  upwards  of  forty-eight  thousand  pins 
in  a  day.  Each  person,  therefore,  making  a  tenth  part  of 
forty-eight  thousand  pins,  might  be  considered  as  making 
four  thousand  eight  hundred  pins  in  a  day.  But  if  they 
had  all  wrought  separately  and  independently,  and 
without  any  of  them  being  educated  to  this  peculiar 
business,  they  certainly  could  not  each  of  them  have 
made  twenty,  perhaps  not  one,  pin  in  a  day." 

There  are  five  reasons  why  the  division  of  labor  in- 
creases its  efficiency. 

First,  the  individual  workman  acquires  more  dexterity 
by  doing  the  same  thing  many  times  than  by  doing  many 
things  a  few  times.  A  man  will  be  a  better  blacksmith 
if  he  works  at  that  trade  every  day  than  if  he  gives  half 
the  week  to  blacksmithing  and  half  to  some  other  trade; 

Second,  the  time  lost  by  passing  from  one  employ- 
ment to  another  is  saved  by  the  division  of  labor.  In 
pin-making,  if  the  man  who  straightened  the  wire  cut  it 
afterwards,  he  would  have  to  drop  one  set  of  tools  and 
take  up  another.  He  might  have  to  move  from  one  part 
of  the  sliop  to  another.  The  time  spent  in  doing  so 
would  amount  to  some  days  in  the  course  of  a  year ; 

Third,  it  is  unnecessary,  when  labor  is  properly  divided, 
to  buy  tools  that  are  used  only  part  of  the  time.  In  the 
case  just  given,  the  tools  used  in  straightening  the  wire 
would  lie  idle  while  the  wire  was  being  cut,  and  vice  versa. 
But  when  two  men  have  charge  of  these  two  processes, 
both  sets  of  tools  are  used  all  the  while ; 


22  PRIMER  OF  POLITICAL  ECONOMT. 

Fourth,  when  labor  is  divided,  the  light  parts  can  be 
given  to  weak  persons,  such  as  women  and  children,  and 
the  heavy  parts  to  strong  men.  Thus  each  employe 
can  be  given  the  work  best  suited  to  his  or  her  powers; 

Fifth,  when  a  workman  does  one  thing  constantly,  he 
is  more  apt  to  invent  some  new  and  better  method  of 
doing  it  than  he  would  be  were  his  attention  divided 
among  a  number  of  processes. 

Labor  can  be  advantageously  divided  to  any  extent, 
as  long  as  each  employe  has  all  his  time  occupied. 

There  are  two  disadvantages  to  the  individual  laborer 
in  the  division  of  labor.  First,  his  work  is  more  mo- 
notonous, and  therefore  may  be  less  pleasant.  Second, 
he  can  do  only  one  small  thing  well,  and  therefore  has 
more  difficulty  in  finding  work  when  out  of  employment. 

These  disadvantages,  however,  decrease  the  efficiency 
of  labor  very  little.     The  advantages  far  outweigh  them. 

Therefore,  the  division  of  labor  increases  its  efficiency. 

DEFINITION  9.    The  part  of  capital  tvhich  is,  or  might 
be,  used  to  pay  labor  is  called  the  wage-fund. 

The  part  which  is  so  used  is  the  real  wage  fund.  Tlic  part 
that  might  be  so  used,  tiiat  is,  tlie  part  wliich  cajiitalists  could 
afl'ord  to  give  in  exchange  for  labor,  is  tlie  possible  wage-fund. 
The  distinction  is  important. 

A  manufacturer  may  jiay  $100,000  a  year  in  wages,  and  make 
a  profit  t)f  $25,000  for  himself.  Ratiier  tlian  have  his  capital  lie 
idle,  lie  would  j^robably  be  willing  to  pa}'  $i  10,000  in  wages,  and 
clear  only  $i5,fxxj.  In  this  case  the  real  wage-fund  is  $100,000, 
and  the  possible  wage-fund  is  one-tenth  more,  or  $110,000. 

The  real  wage-fund  can  never  exceed  the  possible  one,  but  it 
may  fall  below  it.  Workmen,  through  ignorance  or  lack  of 
combined  elVort,  may  receive  less  than  their  employers  could 
atTord  to  pay. 


PRIMER  OF  POLITICAL  ECONOMT.  23 

PROPOSITION   XI. 

The  possible  wage-fund  varies  with  production. 

If  production  increases,  the  possible  wage-fund  in- 
creases, and  vice  versa. 

The  wage-fund  can  never  exceed  the  sum  which  the 
capitalist  is  willing  to  give  in  exchange  for  labor,  because 
he  will  cease  to  use  his  capital  rather  than  expend  more 
than  this  in  wages.  But  since  the  wages  paid  by  the 
capitalist  are  repaid  him  by  the  sale  of  the  product,  the 
more  valuable  the  product  is,  the  more  he  will  be  willing 
to  give  in  exchange  for  labor. 

Therefore,  as  the  product  increases  in  value,  the  greater 
will  be  the  possible  wage-fund.  And  as  the  product  de- 
creases in  value,  the  less  will  be  the  possible  wage-fund. 

Suppose  a  knife-manufacturer  pays  $i  for  labor  which 
produces,  in  a  day,  two  knives  worth  %\  a  piece.  If  the 
workman  labors  with  greater  energy  or  care  and  so  pro- 
duces $2.50  worth  of  knives  every  day,  the  manufacturer 
will  be  willing  to  pay  a  higher  i)rice  for  his  labor,  because 
it  will  be  worth  more  than  it  was  before.  But  if  tlie 
workman  becomes  lazy  or  careless  and  produces  only 
$1.50  worth  of  knives  every  day,  the  manufacturer  can- 
not afford  to  pay  him  as  high  wages  as  he  did  before, 
and  will  therefore  cut  down  his  wages. 

Therefore,  the  possible  wage-fund  varies  with  pro- 
duction. 

PROPOSITION   XII. 

The  real  wage-fund  varies  according  to  the   first   law   of 
demand    and    supply. 

Wages  are  the  price  paid  for  labor.  We  have  seen 
(Prop.  VI)  that  prices  depend  upon  the  ratio  of  demand 
and  supply.  If  demand  exceeds  supply,  prices  rise.  If 
supply  exceeds  demand,  prices  fall.  At  any  given  time, 
there  is  a  demand  for  labor,  represented  by  the  capital 


24  PRIMER  OF  POLITICAL  ECONOMY. 

seeking  investment,  and  a  sui)ply  of  labor,  represented 
by  the  men,  women  and  children  seeking  employment. 
The  ratio  between  the  two  fixes  (Prop.  VI)  the  rate  of 
wages. 

For  if  the  capital  seeking  investment  is  small,  and  the 
number  of  people  offering  their  labor  is  large,  the  latter 
will  compete  with  each  other  for  employment  and  will  be 
willing  to  work  for  very  little  rather  than  get  nothing  to 
do.  Therefore,  wages  will  be  low.  If  the  capital  seek- 
ing investment  is  large,  and  the  number  of  possible 
laborers  small,  the  capitalists  will  compete  with  each 
other  for  the  chance  of  employing  labor,  and  will  be 
willing  to  give  high  wages  rather  than  have  their  capital 
lie  idle.     Therefore,  wages  will  rise. 

The  reason  that  wages  increase  with  the  skill,  morality 
and  trustworthiness  of  the  individual  laborer  is  that  the 
demand  for  such  labor  is  in  excess  of  the  supply. 

When  the  Grand  Trunk  railway  was  being  built  in 
Canada,  English  masons  were  sent  to  that  country. 
They  had  earned  5.^.  a  day  in  England.  For  doing  the 
same  work  in  Canada,  they  got  7^.  (>d.  a  day.  It  cost 
them  no  more  to  live  in  one  country  than  in  the  other. 
The  Canada  wages  were  therefore  1 1^  times  as  high  as 
the  English  wages.  The  reason  of  the  difference  was 
that  there  was  a  greater  demand  for  masons,  in  propor- 
tion to  the  supply  of  masons,  in  Canada  than  in  England. 

Therefore,  the  real  wage-fund  varies  according  to  the 
first  law  of  supply  and  demand. 

PROPOSITION   XIII. 

Wag^es  are  lower  in  an  agreeable  than  in  a  disagreeable, 
in  an  easily-learned  than  in  a  difficult,  and  in  a  steady 
than  in  an  unsteady,  employment. 

For  persons,  in  choosing  their  trades  and  professions, 
are  apt  to  take  the  most  agreeable  employment,  the  one 
that  seems  to  them  easiest  to  learn,  and  the  one  which 
apparently  offers  them  the  most  constant  work.      The 


PRIMER  OF  POLITICAL  ECONOMY.  25 

result  is  that  the  supply  of  labor  in  the  employments  that 
are  disagreeable,  hard  to  learn,  and  uncertain,  is  much 
less  than  the  supply  of  labor  in  more  favored  industries. 
It  is  therefore  more  apt  to  be  insufficient  to  meet  the  de- 
mand. Consequently  (Prop.  XII)  its  wages  are  apt  to 
be  higher. 

Scavengers  get  high  wages  because  their  work  is  very 
disagreeable ;  engravers  get  them  because  their  work  is 
hard  to  learn ;  and  plumbers  get  them  because  their 
work  is  very  uncertain,  now  brisk  and  now  dull. 

Therefore,  wages  are  lower  in  an  agreeable  than  in  a 
disagreeable,  in  an  easily-learned  than  in  a  difficult,  and 
in  a  steady  than  in  an  unsteady,  employment. 

PROPOSITION  XIV. 

The  average  wage  of  labor  is  equal  to  the  quotient  got  bv 
dividing  the  real  wage-fund  by  the  number  of  persons 
employed. 

If  the  daily  wage-fund  of  an  employer  is  $ioo,  and  he 
hires  fifty  men,  it  is  evident  that  he  must  pay  them  an 
average  wage  of  %2,  which  is  the  quotient  of  the  wage- 
fund  ($ioo)  divided  by  the  number  of  men  employed 
(50).  This  will  be  equally  true  if  the  wage-fund  is 
that  of  a  country  instead  of  one  man,  is  yearly  instead  of 
daily,  and  is  counted  by  millions  instead  of  tens  of  dol- 
lars, and  if  the  laborers  are  many  thousands  instead  of 
few  in  number.  Since  the  real  wage-fund  (Def.  9)  is  the 
money  actually  paid  to  laborers,  the  part  of  it  paid  to 
each  laborer,  071  an  average,  must  be  equal  to  the  whole 
divided  by  the  number  of  wage-getters. 

Therefore,  the  average  wage  of  labor  is  equal  to  the 
quotient  got  by  dividing  the  real  wage-fund  by  the  num- 
ber of  persons  employed. 


26  PRIMER  OF  POLITICAL  ECONOMY. 


PROPOSITION   XV. 

The  test  of  the  highness  of  wages   is  their  purchasing 

power. 

If  the  wages  of  A  will  buy  more  than  the  wages  of  B 
will,  A's  wages  are  higher  than  those  of  B,  although 
they  may  not  contain  as  many  dollars  and  cents.  Thus, 
if  A,  in  New  York,  gets  $3  a  day,  and  B,  in  California, 
is  paid  $4  a  day,  and  if  clothing,  food,  rent,  etc.,  are 
twice  as  dear  in  California  as  in  New  York,  $3  in  New 
York  will  buy  as  much  as  $6  in  California,  and  therefore 
A  can  earn  as  many  necessary  things  in  a  day  as  B  can 
in  one  and  a-half  days.  Hence  A's  wages  are  higher 
than  B's,  although  he  gets  %\  less  a  day. 

Suppose  John  Smith,  an  English  carpenter,  earns  four 
shillings  (^i)  a  day,  and  John  Brown,  an  American, 
earns  $2  a  day.  Suppose,  too,  that  a  suit  of  clothes 
costs  $6  in  England  and  $15  in  America.  Then  Smith's 
wages,  reckoned  in  clothes,  are  larger  than  Brown's;  for 
Smith  can  earn  a  suit  in  six  days,  while  Brown  has  to 
work  seven  and  a-half  days  in  order  to  earn  it.  If  other 
necessaries  are  as  cheap  in  England  as  clothes  are, 
then  Smith's  wages,  reckoned  in  anything  except  money, 
are  larger  than  Brown's. 

To  compare  wages,  then,  we  must  first  find  out  how 
much  money  each  laborer  gets,  and  then  how  much  that 
amount  of  money  will  buy.  The  man  who  can  buy  the 
most  has  really  the  highest  wages,  no  matter  how  low 
they  may  be  in  dollars  and  cents. 

Therefore,  the  test  of  the  highness  of  wages  is  their 
purchasing  power. 

PROPOSITION    XVI. 

Wages  can  be  raised  only  by  increasing  the  real  wage-fund 
or  by  lessening  the  number  of  persons  employed. 

This  is  evident,  because  (Prop.  XIV)  wages  are  the 
quotient  of  the  real  wage-fund  divided  by  the  number 


PRIMER  OF  POLITICAL  ECOXOMY.  27 

of  men  employed,  and  the  quotient  can  be  increased 
only  by  increasing  the  dividend,  or  by  diminishing  the 
divisor. 

In  this  case,  the  dividend  may  be  increased  in  four 
ways : 

First,  when  the  real  wage-fund  (see  explanation  of 
Def.  9)  is  the  same  as  the  possible  wage-fund,  an  in- 
crease in  production  may  be  caused  by  increased  energy 
on  the  part  of  the  laborers.  This  (Prop.  XI)  will  in- 
crease the  possible  wage-fund.  The  laborers  can  then 
persuade,  or  perhaps  by  united  action  compel,  the  em- 
ployer to  advance  the  real  wage-fund  as  far  as  the  possi- 
ble wage-fund  has  advanced.  Suppose  a  farmer  can 
afford  to  use  four-tenths  of  his  annual  crop  in  paying  his 
laborers,  and  does  so.  If  the  crop  is  worth  $100,  the 
laborers  will  get  $40.  If  the  crop  rises  in  value  to  $200, 
the  possible  wage-fund  will  be  $80.  The  laborers  may 
be  able  to  persuade  the  farmer  to  give  them  the  benefit 
of  this  advance.  If  not,  they  can  compel  him  to  do  so 
by  refusing  to  work  except  for  the  increased  pay ;  pro- 
vided^ that  he  can  get  nobody  else  to  take  their  places. 
This  latter  remedy  for  low  wages  is,  however,  a  danger- 
ous one  for  the  laborers,  as  Prop.  XIX  will  show. 

Second,  when  the  real  wage-fund  is  below  the  possi- 
ble wage-fund,  persuasion  or  compulsion  may  make  it 
the  same. 

Third,  both  the  real  and  the  possible  wage-funds  are 
increased  (Prop.  XV)  whenever  the  commodities  bought 
by  the  laboring  classes  are  cheapened. 

Fourth,  if  a  laborer,  or  anybody  else,  avoids  unpro- 
ductive consumption  and  saves  what  he  can,  he  increases 
the  wealth  of  the  country,  therefore  the  capital,  and 
therefore  the  wage-fund.  It  is  calculated  that  every 
$1,000  in  the  savings-banks,  by  being  loaned  to  a  man 
who  wishes  to  use  it  as  capital,  can  employ  one  extra 
laborer. 

It  is  far  better  to  increase  the  dividend  (the  real  wage- 


28  PRIMER  OF  POLITICAL  ECONOMY. 

fund)  than  to  diminish  the  divisor  (the  number  of  men 
employed). 

A  decrease  in  this  divisor  will  not  always  increase  the 
quotient,  because  it  is  apt  to  cause  a  decrease  in  the 
dividend.  If  a  wage-fund  of  $io  is  divided  among  five 
men,  and  the  death  or  idleness  of  one  man  involves  a  de- 
crease of  $2  in  the  wage-fund,  wages  will  remain  the 
same.  At  first,  five  men  got  gio,  or  $2  apiece,  now  four 
men  get  $8,  or  $2  apiece.  There  are  two  ways  in  which 
a  decrease  in  the  number  of  men  employed  may  not  in- 
crease the  wages  of  the  remainder : 

First,  since  capital  cannot  produce  anything  (Prop. 
I)  except  with  the  aid  of  labor,  a  diminution  of  the  lat- 
ter may  make  the  stock  of  capital  too  large  to  be  profit- 
ably used  in  connection  with  the  labor  that  is  left.  Part 
of  it  will,  therefore,  be  withdrawn.  This  will  diminish 
the  general  wage-fund.  This  decrease  in  the  dividend 
may  be  large  enough  to  balance,  or  more  than  balance, 
the  decrease  in  the  divisor.  If  it  just  balances  it,  wages 
will  remain  the  same,  as  the  last  example  shows.  If  it 
more  than  balances  it,  wages  will  fall.  Thus  if  the  with- 
drawal of  one  of  the  five  men  leads  to  the  reduction  of 
the  wage-fund  to  $7,  the  four  who  are  left  will  get  onh 
§1.75,  instead  of  $2,  apiece.  Moreover,  the  diminishec 
production  of  one  commodity,  which  is  apt  to  result  fron. 
the  withdrawal  of  labor,  will  raise  its  price,  and  thub 
(Prop.  XV)  really  decrease  the  wages  of  all  buyers  of 
that  commodity; 

Second,  if  the  men  thrown  out  of  work  find  nothing 
else  to  do,  they  will  be  unproductive  consumers.  They 
will  then  be  supported  at  the  expense  of  the  whole  coun- 
try, including,  of  course,  all  wage-getters.  This  will  di- 
minish the  wealth  of  the  country.  A  decrease  in  wealth 
usually  involves  a  decrease  in  capital,  and  a  decrease  in 
capital  means  a  smaller  wage-fund.  In  this  case  too, 
then,  a  smaller  divisor  will  involve  a  smaller  dividend, 
and  therefore  the  quotient  may  not  be  greater. 

Lessening  the  number  of  men  employed  is  thus  at 
best  only  a  temporary  remedy  for  low  wages.     By  de- 


PRIMER  OF  POLITICAL  ECONOMY.  29 

creasing  the  supply,  and  thus  (Prop.  VI)  raising  the  price 
of  the  commodity  on  which  less  labor  is  now  spent,  it 
diminishes  the  wages  of  all  buyers  of  that  commodity. 
By  causing  a  direct  withdrawal  of  capital,  it  diminishes 
the  wage-fund.  By  increasing  the  unproductive  con- 
sumption of  the  country,  it  lessens  its  wealth  and  there- 
fore its  wage-fund. 

■  Nevertheless,  this  decrease  in  the  number  of  employees 
may  raise  wages.  If  half  the  carpenters  in  this  country 
should  die  or  emigrate,  the  wages  of  the  other  half  would 
be  advanced,  although,  owing  to  the  consequent  with- 
drawa.  of  some  capital,  the  new  wages  probably  would 
not  be  double  the  old  ones. 

Therefore,  wages  can  be  raised  only  by  increasing  the 
real  wage-fund,  or  by  lessening  the  number  of  persons 
employed. 

PROPOSITION   XVII. 

The  use  of  labor-saving  machinery  benefits  labor. 

The  use  of  such  machinery  may  at  first  diminish  tne 
number  of  laborers  employed,  but  it  will  ultimately 
increase  the  number.  If  a  spinning-machine  which 
enables  two  men  to  do  the  work  of  ten  is  invented,  its 
use  would  probably  lead,  at  first,  to  the  discharge  of 
some  of  the  spinners  then  employed.  The  saving  in 
labor  would  make  spun  goods  cheaper.  This  would 
(Prop.  XV)  really  raise  the  wages  of  all  laborers  who 
used  such  goods.  Moreover,  the  manufacture  of  the 
new  machines  would  lead  to  the  employment  of  more 
machinists. 

The  gain,  too,  would  be  lasting,  while  the  loss  would 
be  only  temporary.  Experience  has  shown  that  an  arti- 
cle offered  at  a  low  price  will  be  bought  by  many  per- 
sons who  would  prefer  to  get  along  without  it  if  the  price 
asked  were  a  little  higher.  If  a  manufacturer  can  pro- 
duce linen  at  a  cost  of  95  cents  a  yard,  and  can  sell  one 
thousand  yards  if  he  asks  %\.o^  a  yard,  and  three  thou- 
sand yards  if  he  asks  only  $1,  it  will  pay  him  to  choose 


30 


PRIMER  OF  POLITICAL  ECONOMT. 


the  latter  price,  because  he  will  then  make  a  larger  sum 
of  money.     His  two  accounts  would  be  as  follows : 

i,ooo  yards  sold  at  $1.05 $1,050 

Cost  of  same  at  95  cents 950 

Total  profit $      100 

3,000  yards  sold  at  $1 $3,000 

Cost  of  same  at  95  cents 2,Sso 

Total  profit $      150 

The  extra  profit  at  the  lower  price  is  $50. 

The  great  reduction  in  the  cost  of  production,  and 
therefore  in  the  selling-price  of  goods  made  by  machin- 
ery, has  always  hitherto  so  increased  the  demand  for  the 
goods  that  the  manufacturers  have  ere  long  employed  at 
least  as  many  workpeople,  with  the  machinery,  as  they 
did  before  the  machinery  was  invented.  Usually  they 
have  employed  many  more.  Thus,  to  take  the  case  of 
linen,  the  persons  now  employed  in  its  manufacture 
greatly  outnumber  those  so  employed  when  the  work 
was  nearly  all  done  by  hand. 

The  following  little  table,  condensed  from  Mr.  Thomas 
Brassey's  "Work  and  Wages,"  p.  125,  shows  that  in 
England,  Scotland  and  Ireland  the  number  of  persons 
employed  in  the  manufacture  of  several  important  com- 
modities has  increased  with  the  increase  of  the  number 
of  labor-saving  machines,  and  decreased  with  the  de- 
crease in  such  machinery: 


/-.„..„  (  Number  of  power-looms  . 

Cotton \  ^,       ,  -.  "^       , 

{  N  umber  of  employees  , . . 

Woolen,  etc.  \  ^>"'^''  °f  Power-looms  . 
'  I  Number  of  employees  . . . 


Flax,  etc. 


j  Number  of  power-looms 
{  Number  of  employees  . . 


1856. 


298,847 
379.21.3 

.';3..399 
166,885 

8,689 
80,262 


1861. 


1868. 


.399.992 1379.329- 
4.51.569,401.064 


64,818 
173,046 

15.347 
94.003 


118,865 
253.056 

35.047 
135.333 


PRIMER  OF  POLITICAL  ECONOMT.  31 

The  temporary  loss  of  employment  by  the  people 
whose  labor  is  done  by  machinery  is  more  than  counter- 
balanced by  the  permanent  gain  of  the  people  whose 
labor  is  necessary  to  make  the  machines  and  by  the 
finally  increased  demand  for  the  labor  temporarily  in- 
jured. Besides  this,  the  increased  cheapness  of  the 
machine-made  goods  (Prop.  XV)  raises  the  wages  of 
every  laborer  who  buys  them.  This  is  a  permanent  gain 
in  most  cases  for  all  laborers. 

Therefore,  the  use  of  labor-saving  machinery  benefits 
labor. 

PROPOSITION    XVIII. 

High  wages  often  make  high  profits. 

The  cost  of  labor  "  is  determined  by  the  amount  of 
work  really  done  for  the  wages."*  Thus,  if  A  and  B  are 
paid  equal  wages,  and  A  does  twice  as  much  work  as  B, 
B's  labor  is  twice  as  dear  as  A's.  Suppose  they  get  $2 
apiece.  B  produces  10  yards  of  linen  in  a  day  and  A 
produces  20  yards.  Each  yard  produced  by  B  therefore 
costs  20  cents  for  labor,  while  each  produced  by  A  costs 
only  10  cents  for  labor.  It  will  be  cheaper  for  the  em- 
ployer to  hire  A  at  $3  a  day  than  to  continue  to  employ 
B  at  $2.  For  then  linen  will  still  cost  (^3-^-20  =  )  only  15 
cents  a  yard  for  labor,  wliereas  with  B  at  ^2  it  will  cost 
20  cents  a  yard  for  labor.  Good  labor  at  good  wages 
may  therefore  be  cheaper  than  poor  labor  at  poor  wages. 

If  an  employer  gives  higher  wages  than  his  neighbors, 
he  will  attract  to  his  service  the  very  best  laborers.  He 
will  therefore  have  the  advantage  of  a  set  of  workmen 
who  have  more  strength,  skill,  carefulness,  economy  in 
the  use  of  materials,  honesty,  and  sobriety,  than  those  of 
his  neighbors.  His  employees  will  be  careful  not  to  lose 
their  good  places  by  quarreling  with  him  in  any  way. 
The  feeling  that  he  is  treating  them  generously  will  lead 
them  to  treat  him  in  the  same  way.  They  will  not  shirk 
work,  and  thus  part  of  the  expense  of  overseers  may  be 

•  Prof.  Fawcett. 


32  PRIMER  OF  POLITICAL  ECONOMY. 

saved.  The  cheerfulness  and  hopefulness  caused  by 
their  improved  material  condition  will  increase  their  pro- 
ductive powers.  In  Austria  free  hired  labor  was  found 
to  be  three  times  as  jjroductive  as  the  labor  of  serfs. 
The  better  food  which  men  getting  higher  wages  can  buy 
may  also  increase  their  powers  of  production. 

Thus  high  wages  tend  to  increase  production.  They 
often,  as  experience  has  shown,  increase  it  so  largely 
that  the  real  cost  of  production  is  less,  and  the  profits  are 
therefore  higher. 

The  following  proofs  of  this  are  taken  from  Mr. 
Thomas  Brassey's  "  Work  and  Wages  ": 

"  At  the  commencement  of  the  construction  of  the 
North  Devon  [Eng.]  railway,  the  wages  of  the  laborers 
were  2S.  a  day.  During  the  progress  of  the  work  their 
wages  were  raised  to  2S.  dd.  and  t^s.  a  day.  Nevertheless, 
it  was  found  that  the  work  was  executed  more  cheaply 
when  the  men  were  earning  the  higher  rate  of  wages  than 
when  they  were  paid  at  the  lower  rate. 

"  In  London,  in  carrying  out  part  of  the  Metropolitan 
Drainage  works,  it  was  found  that  the  brickwork  was 
constructed  at  a  cheaper  rate  per  cubic  yard  after  the 
wages  of  the  workmen  had  been  raised  to  loj.,  than 
when  they  were  paid  at  the  rate  of  6^'.  a  day. 

"In  the  same  quarry  at  Bonnieres  [France],  in  which 
Frenchmen,  Irishmen  and  Englishmen  were  employed 
side  by  side,  the  Frenchmen  received  3  francs,  the  Irish- 
men 4,  and  the  Englishmen  6  francs  a  day.  At  those 
different  rates,  the  Englishman  was  found  to  be  the  most 
advantageous  workman  of  the  three. 

"  During  the  construction  of  the  refreshment-room  at 
Basingsbroke  [Eng.],  on  one  side  of  the  station  a  Lon- 
don bricklayer  was  employed  at  5^^.  dd.  a  day,  and  on  the 
other  two  country  bricklayers  at  t^s.  6d.  apiece  a  day.  It 
was  found,  by  measuring  the  work  performed,  without 
the  knowledge  of  the  men  employed,  that  the  one  Lon- 
don bricklayer  laid,  without  undue  exertion,  more  bricks 
in  a  dav  than  his  two  less  skilful  country  fellow-laborers. 


PRIMER  OF  POL  I  TIC  At.   ECONOMT.  33 

"On  the  Grand  Trunk  railway,  a  Runiber  of  French 
Canadian  laborers  were  employed.  Their  wages  were 
y.  bd.  a  day,  while  the  Englishmen  received  from  5^.  to 
(iS.  a  day ;  but  it  was  found  that  the  English  did  the 
greatest  amount  of  work  for  the  money." 

If  high  wages  incite  men  to  better  work,  a  smaller 
number  of  men  can  be  employed  to  produce  a  given 
amount.  In  this  way,  while  the  wages  of  the  individual 
are  higher,  the  aggregate  wages  (the  real  wage-fund)  may 
be  less.  If  10  men,  getting  $3  a  day,  will  do  the  work 
of  16  men,  who  get  $2  a  day,  it  is  manifestly  cheaper  for 
the  employer  to  hire  the  10  men.  For  then  he  will  pay 
only  $30  a  day  in  wages  instead  of  $32,  and  will  still 
have  the  same  product. 

The  French  smelting-works  emj)loy  42  men  to  do  the 
work  done  by  25  men  in  English  works  of  the  same  sort. 
If  the  Frenchmen  get  %\  a  day,  and  the  Englishmen 
$1.50,  the  real  cost  of  labor  is  greater  in  France  than  in 
England ;  for  the  42  men  will  be  paid  $42  a  day,  and 
the  25  men  $37.50  a  day.  Both  sets  do  the  same  work. 
Therefore  the  labor  on  this  work  costs  $4.50  less  in  Eng- 
land than  in  France. 

It  must  be  remembered  that  increased  wages  can  only 
make  increased  profits  by  increasing  production.  Hence, 
if  men  are  not  induced  to  work  better  by  getting  better 
wages,  it  is  bad  policy  for  the  employer  to  give  such 
wages.  There  are  cases  in  which  high  wages  will  not 
stimulate  production.  When  the  laborer  can  buy  all  he 
needs  with  low  wages,  if  wages  rise,  he  will  labor  just 
long  enough  to  earn  what  he  used  to  earn  in  a  day,  and 
will  idle  away  the  rest  of  his  time.  The  Hindoos  em- 
ployed in  railway-building  in  India  worked  less  and  less 
as  their  wages  rose.  The  coal-miners  in  England  have 
had  their  wages  greatly  increased  since  1870,  but  their 
hours  of  work  have  since  been  fewer,  so  that  the  value 
of  the  coal  produced  has  not  kept  pace  with  the  in- 
creased value  of  the  wages.  Their  high  wages  have 
3 


34  PRIMER  OF  POLITICAL  ECONOMT. 

therefore    diminished,    not    increased,    profits.      These 
cases  show  that  high  wages  do  not  always  make  high 
profits.     The  previous  proof,  however,  has  shown  that 
they  sometimes  do,  and  in  fact  are  apt  to  do  so. 
Therefore,  liigh  wages  often  make  high  profits. 

DEFINITION  lo.  A  strike  is  a  conspiracy  of  ejnployees 
against  employers^  by  which  the  former  refuse  to  work 
unless  the  latter  yield  to  their  wishr 

DEFINITION  II.  A  lock-out  is  a  conspiracy  of  employers 
against  employees,  by  which  the  former  refuse  to  give  t/ie 
latter  work  unless  the  employees  yield  to  their  7i)ishes. 

PROPOSITLON   XIX. 

It  is  bad  policy  to  strike. 

When  men  strike,  the  side  which  can  afford  to  be  idle 
the  longest  will  win.  The  masters  are  usually  rich 
enough  to  live  on  their  accumulated  property  for  some 
time.  The  men  often  have  no  savings,  and  rarely,  if 
ever,  have  large  ones.  They  may  belong  to  a  trade- 
union  which  will  supply  them  with  means  of  subsistence 
for  some  time,  but  the  small  funds  of  such  a  society,  di- 
vided among  a  number  of  men,  cannot  go  far.  The 
masters  must  have  the  men  work  in  order  to  have  their 
caj)ital  yield  them  anything,  l)ut  the  men  must  work  in 
order  to  live.  It  is  plain  that  the  masters  can,  as  a  rule, 
stay  idle  the  longest. 

i'he  masters  can  combine  against  the  men.  Since  a 
strike  which  forced  one  employer  to  raise  wages  would 
probably  compel  all  similar  em[)loyers  in  that  part  of 
the  country  to  increase  their  wage-funds,  too,  it  is  to  the 
apparent  interest  of  every  employer  that  no  strike  should 
succeed.  Hence,  if  one  set  of  employees  is  supported 
while  on  strike  by  the  contributions  of  their  comrades 
who  are  still  at  work,  the  employers  of  the  latter  often 


PRIMER  OF  POLITICAL  ECONOMY.  35 

make  a  lock-out  (Def.  ii),  and  so  cut  off  this  source  of 
supply  and  starve  all  the  men  together  into  submission. 

The  masters  can  combine  with  more  effect  tlian  the 
men,  because  they  are  fewer  and  better  informed. 

It  grows  more  difficult  to  strike  successfully,  every 
year,  because  the  increased  facilities  of  transportation 
enable  the  employers  to  bring  men  from  other  parts  of 
the  country,  and  even  from  other  countries,  to  take  the 
place  of  the  strikers.  Men  have  been  engaged  in 
Sweden  and  brought  to  this  country  to  take  the  place  of 
Americans  who  were  on  strike. 

A  strike  is  apt  to  create  a  habit  of  idleness  among  the 
strikers,  which  unfits  them  for  good  work  thereafter. 
They  are  often  led  to  drink  in  order  to  while  away  the 
time.  The  want  from  which  they  and  their  families  suffer 
while  they  earn  nothing,  sometimes  drives  them  to  theft. 
If  these  dangers  are  escaped,  a  strike  usually  consumes 
all  the  men's  savings,  and  obliges  them  to  waste,  in  un- 
productive consumption,  a  large  part,  if  not  all,  of  the 
trade-union's  funds,  wliich  are  the  joint  savings  of  them- 
selves and  their  fellows.  The  strike  of  the  Preston 
(England)  spinners,  in  1836,  cost,  the  men  $300,000  and 
the  masters  over  $200,000.  The  strike  of  17,000  Preston 
spinners  for  thirty-six  weeks,  in  1853,  cost  the  mas- 
ters $825,000  and  the  men  $2,100,000.  The  strike  of 
the  Belfast  (Ireland)  weavers  in  1874  cost  the  strikers 
$1,000,000. 

The  fear  of  constant  trouble  from  strikes  is  apt  to 
drive  away  capital,  and  thus  make  it  necessary  for  the 
men  dependent  upon  the  wage-fund  part  of  that  capital 
to  seek  employment  elsewhere.  A  prolonged  strike  has 
sometimes  utterly  ruined  the  industries  of  a  whole  town. 
The  prosperity  of  Norwich,  England,  ended  with  a  great 
strike  there  in  1S30. 

Much  of  the  Russian  trade  has  been  lost  to  English 
manufacturers,  because  the  Russian  merchants,  hearing 
of  strikes  in  England,  and  fearing  their  orders  could  not 
be  executed  there,  have  sent  the  orders  elsewhere. 


36  PRIMER  OF  POLITICAL  ECONOMT. 

If,  however,  all  these  obstacles  are  overcome  and  the 
strike  succeeds,  it  very  seldom  repays  the  men  what  they 
have  given  for  it.  They  rarely  get  the  higher  wages  for 
any  long  time,  unless  the  working  of  the  first  law  of  sup- 
ply and  demand  (Prop.  VI)  would  have  soon  given  them 
these  wages  without  a  strike.  For  such  artificial  changes 
in  wages  only  interrupt,  not  destroy,  the  natural  law  laid 
down  in  Proposition  XII.  Despite  all  that  employers 
or  employees  can  do,  that  law  will  in  the  long  run  fix 
wages. 

Suppose  I, GOO  men,  each  earning  $3  a  day  or  $3,000 
a  day  together,  strike  for  three  months  in  order  to  get 
$3.50  a  day.  The  strike  will  cost  them  the  wages  they 
would  have  earned,  or  $3,000  a  day.  Its  total  cost  for 
the  eighty  working  days  in  the  three  months  will  be 
eighty  times  $3,000  or  $240,000.  When  they  resume 
work  at  $3.50  a  day,  they  will  receive  fifty  cents  apiece, 
0/  $500  together  a  day  more  than  before.  This  is  what 
the  strike  pays  them.  It  will  be  necessary  for  them  to 
work  480  days  (or,  including  Sundays,  over  eighteen 
months)  before  they  have  made  up  the  money  they  lost 
by  the  strike;  for  the  loss  was  $240,000,  and  $500  a  day 
for  480  days  just  equals  $240,000.  Not  until  the  eigh- 
teen months  are  over  will  the  successful  strike  have 
added  a  cent  to  their  incomes.  But  it  is  very  improbable 
that  they  will  get  the  $3.50  for  eighteen  months,  unless 
the  law  of  wages  wou-ld,  before  the  eighteen  months  were 
over,  have  given  it  to  them  at  any  rate.  And  in  that 
event  the  money  spent  on  the  strike  was  simply  wasted. 

In  order  that  a  strike  shall  succeed,  three  things  are 
absolutely  necTissary :  First,  the  real  wage-fund  must  be 
less  than  the  possible  wage-fund ;  for  if  the  two  coin- 
cide, no  power  whatever  (see  proof  of  Prop.  XI)  can 
raise  wages  ;  second,  the  men  must  have  means  of  subsist- 
ence for  some  time;  third,  they  must  not  only  stop  work 
themselves,  but  they  must  persuade  or  compel  all  their 
fellow-workmen  to  refuse  to  work  for  this  particular 
employer.     If  they  compel  them  to  refuse,  they  are  liable 


PRIMER  OF  POLITICAL  ECONOMT.  37 

to  be  fined  or  imprisoned ;  for  a  man  has  a  right  to  sell 
his  labor  to  anybody  engaged  in  honest  business,  and 
compelling  him  to  give  up  this  right  is  a  crime. 

While,  then,  a  strike  may  sometimes  succeed,  the 
chances  are  greatly  against  it ;  and  if  it  does  succeed,  it 
rarely  repays  its  cost. 

Therefore,  it  is  bad  policy  to  strike.  ^  ^ 

PROPOSITION   XX. 

It  is  to  the   advantage  of  both   employers   and   employees 
to   settle   their   disputes   by   arbitration. 

This  method  of  settlement  is  as  follows :  The  em- 
ployers and  the  employees  together  choose  one  or 
more  persons  who  are  to  act  as  the  judge  or  judges  of 
the  dispute.  Before  the  court  thus  formed  each  side 
states  its  grievances  and  its  wishes.  The  workmen  ex- 
plain, for  instance,  why  they  think  their  wages  should  be 
increased,  and  the  employers  tell  what  reasons  they  have 
for  not  raising  wages.  The  judges,  having  heard  both 
sides  fully,  decide  which  is  right. 

As  the  judges  are  chosen  for  their  integrity  and  fair- 
ness by  both  the  parties  to  the  quarrel,  this  decision 
usually  satisfies  both  sides.  As  masters  and  men  agreed 
to  submit  the  question  to  these  judges,  both  parties  are 
bound,  in  honor,  to  obey  the  decision  that  is  given. 
They  usually  do  so.  Thus  an  interruption  of  work  and 
a  waste  of  wealth  by  a  strike  or  a  lock-out  are  prevented, 
and  good  feeling  is  preserved  between  masters  and 
men. 

Mr.  Walter  Morrison,  a  Member  of  Parliament,  and 
Judge  Rupert  Kettle,  both  of  England,  have  persuaded 
the  employers  and  employees  in  a  number  of  English 
manufacturing  towns  to  establish  permanent  boards  of 
arbitration.  Half  of  the  members  of  these  boards  are 
elected  by  the  masters,  and  half  by  the  men.  They 
have  decided  very  many  trade  disputes,  and  have  saved 
millions  of  dollars  that  would  have  been  wasted  if  the 


2182()(i 


38  PRIMkR  OF  I'OLITICAL  ECONOMY. 

men  interested  had  struck  against  the  masters,  or  if  the 
masters  had  locked-out  the  men. 

In  France,  there  are  regular  arbitration  courts  (called 
"  Conseils  des  Prud'hommes  "),  organized  under  the  laws 
of  the  country.  These  courts  consist  of  a  President  and 
Vice-President,  appointed  by  the  government,  and  six 
other  persons,  who  are  elected  by  the  employers  and  em- 
ployees. No  salaries  are  paid,  so  that  arbitration  is  cheap. 
A  committee  of  the  judges,  consisting  of  one  employer 
and  one  workman,  holds  almost  daily  sessions.  Thomas 
Brassey  says  in  his  "  Work  and  Wages  ":  "  The  result  in 
95  out  of  IOC  cases  brought  before  these  tribunals  is  a 
reconciliation  between  the  parties,  and  although  appeals 
are  permitted  to  the  superior  courts  of  law  they  are 
rarely  made.  Lord  Brougham,  in  a  speech  in  the  House 
of  Lords  in  1859,  declared  that  'in  18*50,  28,000  disputes 
had  been  heard  before  the  Conseils  des  Prud'hommes, 
of  which  no  less  than  26,800  were  satisfactorily  settled.'" 

Arbitration  has  often  prevented  wasteful  strikes  and 
lock-outs  in  this  country. 

Therefore,  it  is  to  the  advantage  of  both  employers 
and  employees  to  settle  their  disputes  by  arbitration. 

PROPOSITION   XXI. 

The  best  way  to  produce  wealth  is  by  co-operation. 

True  cooperation  exists  only  when  every  one  who  has 
contributed  to  the  production  of  anything  receives  a  share 
of  its  proceeds  in  proportion  to  the  worth  of  hi»  work. 
If  his  capital  or  his  labor  has  done  half  the  work,  he 
owns  half  the  product.  If  he  has  done  T-jToioooth  part 
of  the  work,  he  owns  -nrolhnnrth  part  of  the  product. 

Cooj^eration  may  be  productive  or  distributive.  It 
may  be  between  a  master  and  his  men,  or  between  the 
men  alone.  A  cooperative  coal-mining  company  is  an 
example  of  cooperative  production.  A  cooperative 
grocery  is  an  example  of  cooperative  distribution.  Co- 
operation between  master  and  men  exists  when  the  men 


PRIMER  OF  POLITICAL  ECONOMY.  39 

have  a  share  in  the  profits,  outside  of  their  wages.  Co- 
operation between  men  exists  when  the  men  have  all  the 
profits,  that  is,  when  the  workmen  in  an  establishment 
own  the  establishment  between  them. 

Distributive  cooperation  is  safer  than  productive. 
The  capital  and  skill  required  in  the  management  of  a 
grocery,  which  usually  has  a  steady  circle  of  customers 
and  sells  to-day  what  it  bought  yesterday,  are  miich  less 
than  the  skill  and  capital  required  in  the  management  of 
a  coal-mine.  The  cost  of  mining  the  coal  is  great.  A 
good  deal  of  capital  is  therefore  necessary.  The  cost  is 
also  rather  uncertain.  The  price  at  which  the  product 
can  be  sold  varies  from  week  to  week.  A  great  number 
of  causes  affect  it.  All  these  things  must  be  foreseen,  as 
far  as  possible.     Great  skill  is  therefore  required. 

The  best  of  all  forms  of  cooperation  is  that  between 
master  and  men.  For  in  this  the  men  gain  the  use  of 
the  skill  and  the  capital  of  the  master,  and  the  master 
gains  the  hearty  goodwill  and  the  uttermost  skill  and  en- 
ergy of  the  men. 

There  is  little  cooperation  in  America,  but  a  good  deal 
of  it  in  England  and  Germany. 

As  an  example  of  cooperative  distribution,  by  work- 
men alone,  we  will  take  the  Equitable  Pioneer  Society, 
of  Rochdale,  a  manufacturing  town  near  Manchester, 
England.  In  1842,  twenty-eight  weavers  formed  this 
company.  They  were  so  poor  that  they  could  pay  into 
the  capital-fund  only  four  cents  apiece  per  week.  It 
took  them  two  years  to  accumulate  a  capital  of  5^140. 
On  a  December  evening,  in  1844,  "Toad  lane,"  a  dingy 
little  street  in  Rochdale,  was  crowded  with  a  hooting 
rabble,  gathered  to  see  the  opening  of  the  "weavers' 
shop."  When  the  shutters  of  the  little  room  the  Society 
had  hired  were  taken  down,  the  jeering  crowd  screamed 
with  laughter  at  the  sight  of  the  almost  empty  shelves 
within.  For  a  long  time  the  twenty-eight  weavers  were 
the  only  customers.  Thev  could  not  afford  to  hire  a 
clerk,  so  they  took  turns  in  "  keeping  store  "  in  the  even- 


40  PRIMER  OF  POLITICAL  ECONOMT. 

ings.  It  was  shut  during  the  day.  The  scanty  stock  of 
groceries  was  soon  sold.  Its  proceeds  bought  a  larger 
stock.  This  went,  and  the  next,  and  the  next,  and  so  on. 
By  buying  their  goods  directly  from  the  producers,  they 
got  them  so  cheaply  that  they  could  sell  them  below 
the  usual  prices,  pay  all  the  store  expenses,  and  declare 
a  small  dividend  on  the  capital.  In  1845  their  capital- 
fund  was  $910.  Their  membership  was  seventy-four. 
Soon  they  rented  a  larger  room  and  hired  a  manager. 
In  1846,  they  began  to  sell  meat ;  in  1847,  dry  goods;  in 
1852,  boots,  shoes  and  clothing.  In  1852  they  opened 
a  wholesale  department.  From  the  start,  the  weavers 
have  kept  on  weaving.  This  co-operative  store  is  man- 
aged by  persons  they  employ,  but  it  does  not  interfere 
with  their  work. 

The  main  building  of  the  Society  is  now  the  most  con- 
spicuous structure  in  Rochdale.  Its  top-floor  is  a  plain, 
comfortable  hall,  where  the  monthly  meetings  of  mem- 
bers are  held,  lectures  delivered,  and  parties  given.  On 
the  floor  below  are  the  reading-room  and  the  library. 
The  latter  has  about  ten  thousand  volumes.  There  are 
eleven  branch  reading-rooms  in  the  town.  The  Society 
maintains  schools  for  its  members  and  their  children.  It 
has  a  collection  of  scientific  instruments  which  it  loans 
for  two  or  three  cents  an  evening  to  members  who  wish 
them  for  their  own  instruction  or  for  the  entertainment 
of  their  friends.  The  two  lower  floors  of  the  building 
are  divided  into  the  different  stores  the  Society  owns,  and 
the  basement  is  devoted  to  packing  and  storage.  There 
are  branch  stores  in  different  jjarts  (jf  the  town, —  among 
them  eleven  butcher-shops  and  thirteen  groceries.  The 
Society  manufactures  tobacco,  and  has  invested  some  of 
it?  spare  funds  in  corn,  cotton  and  woolen  mills.  These 
are  pro[)erly  examj^les  of  productive  co-operation,  how- 
ever, so  that  we  will  not  discuss  them  here.  In  Decem- 
ber, 1 87 1,  the  Society  began  to  build  homes  for  its 
members.  It  now  sells  them  coal.  Almost  from  the 
beginning,  it  has  been  their  savings  bank,  receiving  de- 
posits at  any  time  and  ])aying  interest  upon  them. 


PRIMER  OF  POLITICAL  ECO.XuMT.  41 

Mr.  George  Jacob  Holyoake,  an  English  journalist, 
scholar  and  co-operator,  has  written  a  "  History  of  Co- 
operation in  Rochdale."     We  quote  this  passge  from  it: 

"These  crowds  of  humble  workingmen,  who  never  knew  be- 
fore when  they  put  good  food  in  their  mouths,  whose  every  din- 
ner was  adulterated,  whose  shoes  let  in  the  water  a  month  too 
soon,  whose  new  coats  shone  with  '  devil's  dust,'  and  whose  wives 
wore  calicoes  that  would  not  wash,  now  buy  in  the  markets  like 
millionaires,  and,  as  far  as  pureness  of  food  goes,  live  like  lords. 
They  arc  weaving  their  own  stutfs,  making  their  own  shoes, 
sewing  their  own  garments,  grinding  their  own  corn.  'I'hcy  buy 
the  purest  sugar  and  the  best  tea,  and  grind  their  own  coffee. 
They  slaughter  their  own  cattle,  and  the  finest  beasts  of  the  land 
waddle  down  the  streets  of  Rochdale  for  the  consumption  of 
flannel-weavers  and  cobblers.  .  .  .  The  teetotalers  of  Roch- 
dale acknow  ledge  that  the  Store  has  made  more  sober  men  since 
it  commenced  than  all  their  efforts  have  been  able  to  make  in 
the  same  time.  Husbands  who  never  knew  what  it  was  to  be 
out  of  debt,  and  poor  wives  w  ho  during  forty  years  never  had 
sixpence  uncondemned  in  their  pockets,  now  possess  little 
stores  of  money,  sullicient  to  build  Ihem  cottages,  and  go  every 
week  into  their  own  market,  witli  money  jingling  in  their 
pockets.  And  in  that  market  there  is  no  distrust  and  no  decep- 
tion; there  is  no  adulteration  and  no  second  prices.  The  w  hole 
atmosphere  is  honest." 

The  official  report  of  the  Society  for  the  three  months 
ending  June  lo,  1873,  states  the  amount  of  sales  for  that 
time  at  {1360,985.  This  enormous  business  has  been 
built  up,  and  is  now  controlled,  by  men  who  work  for 
daily  or  weekly  wages. 

The  Equitable  Pioneers'  Society  is  organized  in  this 
way :  Anybody  who  is  api)roved  by  a  majority  of  the 
Executive  Committee  and  of  the  members  can  join  the 
Society,  He  must  subscribe  for  five  shares  of  $5  each, 
pay  an  admission  fee  of  25  cents,  and  pay  9  cents  a  week 
until  his  five  shares  are  all  paid  for.  The  money  re- 
ceived in  this  way  is  the  share-capital  of  the  Society. 
There  is  also  a  loan-capital,  formed  by  deposits  by  mem- 
bers. Interest  is  paid  on  these  deposits  and  they  can  be 
withdrawn  at  any  time.  While  the  Society  has  them,  it 
uses  them  to  extend  its  business.  They  are,  therefore, 
part  of  its  capital.   All  goods  are  bought  and  sold  for  cash. 


42  PRIMER  OF  POLITICAL  ECONOM2'. 

This  rule  is  not  proved  by  its  exceptions,  because  it  has  no 
exceptions  whatever. '  The  Society  sells  its  wares  at  about 
the  market  rates,  sometimes  a  trifle  lower.  The  profits 
are  divided  in  this  way :  The  expenses  of  management 
and  the  guaranteed  interest  of  5  per  cent,  on  the  loan- 
capital  are  paid;  then  a  dividend  (never  above  5  per 
cent.)  on  the  share-capital  is  declared;  then  25^  per 
cent,  of  the  remainder  is  allotted  to  the  educational  fund 
(this  amounts  to  over  $5,000  a  year) ;  and  the  rest  is  di- 
vided among  all  the  patrons  of  the  Store  in  proportion  to 
their  purchases.  If  one  person  has  bought  %2q>  worth  of 
goods,  and  another  %\o  worth,  the  first  gets  twice  as  much 
of  this  dividend  on  purchases  as  the  second.  A  non- 
member  gets  about  half  as  much  as  a  member  would.  In 
the  quarter  ending  June  10,  1873,  the  dividend  on  pur- 
chases was  1 21^  per  cent.  A  member  who  had  bought 
$100  worth  of  goods  would  then  get  $12.50  back,  and  a 
non-member  who  had  bought  as  largely  would  get  $6.25. 

The  members  of  the  Equitable  Pioneers'  Society 
therefore  get  back  part  of  the  price  they  pay  for  every- 
thing at  their  store,  get  dividends  on  their  shares,  get  in- 
terest on  any  savings  they  deposit  with  the  Society,  have 
the  use  of  reading-rooms,  books,  schools,  etc.,  and  get 
pure,  good,  unadulterated  wares.  Adulteration  can  be 
prevented  only  by  making  the  interests  of  buyer  and 
seller  identical,  and  this  can  be  done  only  by  distributive 
co-oi)cration. 

As  an  example  of  co-operative  production  by  employ- 
ers and  workmen  together,  we  will  take  the  Briggs 
Brothers'  Coal-mining  Company,  in  Yorkshire,  England. 

The  Briggs  brothers  owned  and  worked  two  collieries. 
They  were  in  constant  trouble  with  their  men,  who  were 
a  drinking,  uproarious,  careless  set.  The  men  had  a 
rough  saying,  "All  coal-owners  is  devils,  but  Briggs  is 
the  prince  of  devils."  This  shows  how  great  the  ill- 
feeling  was.  Strikes  were  frequent.  The  men  took 
holidays,  too,  on  the  slightest  pretext.  A  boy,  by  toss- 
ing up  his  cap  and  shouting  "  Let's  stop  work  for  to- 


PRIMER  OF  POLITICAL  ECONOMY.  43 

day !  "  could,  it  is  said,  induce  the  whole  crowd  of  boys 
and  men  to  spend  the  day  idly.  The  cost  of  taking  care 
of  the  two  mines,  pumping  the  water  out  of  them,  etc., 
was  $i,ooo  a  day,  whether  mining  was  carried  on  or  not. 
Every  day,  then,  that  the  men  did  not  work  was  a  clear 
loss  of  at  least  $i,ooo  to  the  Briggs  brothers.  They 
only  made  about  6  per  cent,  on  their  capital  on  an 
average. 

In  i860,  Prof.  F'awcett,  a  great  English  statesman  and 
politico-economist,  ])ublished  a  sketch  of  a  plan  for  co- 
operation between  masters  and  men.  In  1866  the  Briggs 
brothers  resolved  to  try  this  plan.  They  formed  a 
joint-stock  company  and  issued  9,770  shares,  worth  $50 
each.  The  men  were  allowed  to  buy  some  of  these 
shares,  paying  for  them  in  installments.  Very  few  of  them 
have  done  this,  however.  Only  264  shares  are  now  held 
by  the  workmen.  At  the  same  time  the  Briggs  brothers 
announced  that  the  profits  would  thereafter  be  divided 
in  the  following  way:  First,  a  dividend  of  10  per  cent, 
would  be  paid  on  all  the  shares;  second,  the  remainder 
of  the  profits  would  be  divided  into  two  equal  parts. 
One  of  these  parts  would  be  used  to  pay  an  extra  divi- 
dend on  the  ca])ital  stock,  and  the  other  would  be 
divided  among  all  the  workmen,  whether  shareholders  or 
not,  in  proportion  to  the  wages  each  had  earned  during 
the  year.  If  A  had  earned  $200  and  B  $100  during  the 
year,  A  would  get  twice  as  much  as  B  of  this  dividend 
on  labor. 

The  results  of  this  were  remarkable.  The  men,  hav- 
ing a  promise  of  half  the  profits  over  10  per  cent,  on  the 
stock,  did  all  they  could  to  raise  the  profits  above  that 
figure.  They  worked  steadily.  They  were  careful  of 
the  wood  and  tools  used.  When  a  man  found  a  broken 
tool,  or  anything  of  the  sort,  instead  of  kicking  it  aside 
as  he  would  once  have  done,  he  picked  it  up  and  took  it 
to  the  office  to  be  repaired,  saying  "  That's  so  much 
towards  the  'divvy.'"  "Divvy"  is  their  pet  name  for 
dividend.     It  became  the  interest  of  all  that  each  should 


44  PRIMER  OF  POLiriCAL   ECONOMY. 

work.  They  acted  as  overseers  for  each  other.  This 
saved  a  good  deal.  Public  opinion,  which  before  favored 
dissipation,  now  opposed  it.  Idleness,  drinking  and  riot- 
ing were  frowned  upon.  They  became  far  less  com- 
mon. The  best  of  good  feeling  sprang  up  between  the 
Briggs  brothers  and  their  men.  All  questions  about 
wages,  hours  of  work,  etc.,  were  settled  by  friendly  talks 
or  by  arbitration.  At  the  end  of  the  first  year,  under 
the  new  scheme,  the  Briggs  brothers  and  the  sharehold- 
ing workmen  got  a  dividend  of  lo  per  cent,  and  $8,500 
besides,  while  another  $8,500  was  divided  among  the 
workmen.  The  second  year,  the  dividend  to  labor  was 
$17,500.  The  plan  has  now  (1875)  been  in  operation 
about  eight  years.  The  Briggs  brothers,  who,  before 
1866-7,  got  an  annual  profit  of  6  per  cent,  on  their  capi- 
tal, are  said  to  have  cleared  a  yearly  profit  of  from  15  to 
17  per  cent,  ever  since.  Meanwhile,  their  workmen, 
whether  shareholders  or  not,  have  had  annual  dividends 
on  their  labor,  and  part  of  the  profits  have  been  used  in 
supporting  a  library  and  schools  for  the  benefit  of  the 
miners  and  their  families.  There  has  been  a  very 
noticeable  advance  in  the  morality,  intelligence  and 
thrift  of  the  whole  body  of  employees.* 

Co-operation  thus  prevents  strikes,  promotes  good-will, 
causes  honest  work,  checks  wastefulness,  saves  the  ex- 
pense of  overseers,  offers  the  workman  an  opi)ortunity  to 
invest  his  savings  at  a  profit,  encourages  thrift,  morality 
and  education,  and  increases  the  profits  of  all  the  co- 
operators,  f 

Therefore,  the  best  way  to  produce  wealth  is  by 
co-operation. 

•  Since  this  passage  was  written,  a  tnido-iinion  to  which  the  miners  employed 
by  the  \\t\^v,>,  brothers  lielongcd  has  compelled  them  to  l>rcak  up  this  industrial 
partnership.  This  action  on  the  part  of  the  union  was  a  piece  of  V)arbarous 
itupidity,  without  excuse.     The  reason  for  it  is  unknown. 

■t  .Mr.  Charle.1  I'radlaugh  informs  us  that  in  his  opinion  distributive  co- 
operation has  been  proved  a  complete  success  in  England,  and  that  product- 
ive co-operation,  although  tried  as  yet  only  in  a  few  cases,  promises  well. 


PRIMER  OF  POLITICAL   ECONOMY.  45 


PROPOSITION   XXII. 

Trade-union  funds  can  be  best  used  in  promoting  co-opera- 
tion. 

These  funds  are  now  used  in  two  ways.  First,  in  help- 
ing members  of  the  particular  union  to  live  while  they 
cannot  find  work,  and  in  making  up  their  losses  by  fire, 
theft,  etc.  Second,  in  supporting  them  while  on  strike. 
The  first  use  is  a  good  one.  The  second  is  apt  (Prop. 
XIX)  to  merely  waste  the  funds.  It  is  rarely  advisable. 
The  wealth  wasted  in  supporting  a  set  of  strikers  for 
some  weeks  or  months  would  often  be  more  than  enough, 
if  loaned  to  the  men  by  the  union,  to  enable  them  to 
buy  an  interest  in  their  employer's  business,  or  even  to 
set  them  up  in  business  for  themselves. 

In  1874,  the  journeymen  shoemakers  of  Chicago,  after 
a  long  and  useless  strike  against  a  reduction  of  wages, 
started  a  co-operative  shoe-manufactory.  It  failed  for 
want  of  capital.  But  the  wealth  furnished  by  the  trade- 
union  and  unproductively  consumed  by  the  shoemakers 
while  on  strike  would  have  been  more  than  enough 
capital  for  their  manufactory.  If  it  had  been  loaned  to 
them  for  this  purpose  at  the  beginning,  and  if  any  of 
them  had  had  sufficient  skill  to  manage  the  business, 
they  could  have  had  both  the  wages  of  their  labor  and 
the  profits  on  it  for  themselves.  As  it  was,  they  con- 
sumed the  wealth  unproductively,  cleared  no  profit  on  it, 
and  had  to  go  back  to  work  at  the  lower  rates  offered  by 
their  old  employers.  Some  of  them  could  not  get  work 
at  all,  because  the  vacant  places  had  been  partly  filled 
with  shoemakers  brought  from  the  East.  These  unfor- 
tunates had  to  go  to  the  expense  of  seeking  employment 
in  other  cities. 

Trade-unions  should  use  their  funds  in  this  way.  As 
soon  as  a  union  accumulates  a  few  hundred  or  thousand 
dollars  above  the  amount  it  needs  for  the  relief  of  tem- 
porary distress  among  its  members,  it  should  loan  this 
surplus,  with  proper  precautions  for  its  repayment,  to  the 


46         -PRIMER  OF  POLITICAL  ECONOMY. 

set  of  its  members  which  would  pay  most  for  the  use  of 
it.  These  men  should  then  employ  it  in  productive  or 
distributive  co-operation.  By  the  former  they  could 
raise  their  wages  in  money,  and  so  in  purchasing  power. 
By  the  latter,  they  could  raise  them  in  purchasing  power 
by  cheapening  the  prices  of  the  necessaries  of  life. 
They  would  gradually  repay  the  loan  out  of  their  extra 
profits.  Meanwhile,  the  trade-union  would  accumulate 
another  surplus,  and  loan  that  in  the  same  way.  This 
would  be  repeated  again  and  again,  until  at  length  all 
the  members  of  the  union  would  become  small  capital- 
ists as  well  as  laborers,  getting  profits  on  their  capital 
and  wages  on  their  labor. 

At  present,  trade-union  funds  do  only  temporary  good 
to  the  members  of  the  union.  Under  the  system  here 
proposed,  the  funds  would  do  the  members  permanent 
good. 

Therefore,  trade-union  funds  can  be  best  used  in  pro- 
moting co-operation. 

PROPOSITION   XXIII. 

Wealth,  when   produced,  is  divided  into  rent,  profits   and 

wages. 

We  have  seen  (Prop.  I)  that  three  things  are  needed 
to  produce  wealth, —  natural  agents,  capital  and  labor. 
Each  of  the  three  must  be  paid  for,  except  (Prop.  II) 
the  natural  agents  which  are  practically  unlimited  in 
quantity,  and  therefore  are  not  wealth.  Rent*  is  the 
portion  of  the  product  which  pays  for  the  limited  natural 
agents ;  profits,  the  portion  which  pays  for  the  capital ; 
and  wages,  the  portion  which  pays  for  the  labor. 

Suppose  A  rents  an  iron-mine  and  the  land  on  which 
his  smelting  works  stand  for  ^i 0,000  a  year.  He  pays 
wages  of  $70,000  a  year.  The  annual  product  of  his 
works  is  100,000  bars  of  iron  worth  $1  apiece.     Then 

•  Notice  the  difference   between  this  meaning  of  "rent"    and  it>   ordinary 
aaeaning. 


PRIMEH  OF  POLITICAL  ECONOMY  47 

the  $100,000  of  wealth  produced  will  be  divided  into 
rent  of  $10,000,  wages  of  $70,000  and  profits  of  $20,000. 
If  A  has  had  .charge  of  the  business,  the  $20,000 
will  be  partly  profits,  and  partly  his  wages  as  general 
manager. 

The  real  profits  are  usually  smaller  than  the  apparent 
ones,  because  the  portion  of  the  product  allotted  to  the 
capitalist  is  usually  partly  composed  of  his  wages.  His 
mental  lalior  has  as  much  right  to  reward  as  the  mental 
or  bodily  labor  of  his  employees.  It  is  not  correct  to  in- 
clude the  wages  he  earns  in  the  profits  his  capital  earns. 

Since  there  can  be  no  production  (Prop.  I)  if  any  one 
of  the  three  factors  does  not  aid  the  other  two,  it  is  right 
that  every  one  of  the  three  sliould  be  rewarded  for  its 
aid.  Thus  capital  has  as  much  right  to  its  profits  as 
labor  has  to  its  wages. 

The  limited  natural  agents,  capital  and  labor,  are  all 
wealth.  Therefore  (Def.  4)  something  can  be  got  in  ex- 
change for  them.  And  hence,  since  all  three  are  used 
in  producing  wealth,  the  owners  of  each  get  something 
in  exchange  for  it  from  the  wealth  produced. 

Therefore,  wealth,  when  produced,  is  divided  into 
rent,  profits  and  wages. 

PROPOSITION  XXIV. 

Wealth  is  sometimes  shared  between  three  classes,  and 
sometimes  between  two,  and  is  sometimes  absorbed  by 
one. 

When  the  land,  the  capital  and  the  labor  used  in  pro- 
duction are  furnished  by  three  different  persons,  or  sets 
of  persons,  the  first  gets  the  rent;  the  second  the  profits, 
and  the  third  the  wages. 

But  when  one  class  furnishes  any  two  of  these  three 
productive  powers,  the  wealth  is  shared  between  two 
classes.  For  if  one  man  owns  the  land  and  the  capital, 
he  gets  both  the  rent  and  the  profits.  The  other  per- 
sons, who   furnish  the  labor,  get  the  wages.      If  some 


48  PRIMER  OF  POLTriCAL  ECONOMT. 

agricultural  laborers  rent  a  farm  and  cultivate  it,  they  will 
get  the  profits  and  wages,  and  the  landowner  will  get  the 
rent.  If  a  landowner  borrows  some  capital  to  use  on  his 
land  and  does  the  necessary  work  himself,  he  will  get  the 
rent  ahd  the  wages,  and  the  part  of  the  profits  earned  by 
his  capital,  and  the  lender  of  the  rest  of  the  capital  will 
get  the  rest  of  the  profits. 

When  one  man  owns  the  land,  the  capital  and  the 
labor  (his  own  or  that  of  slaves),  he  gets  rent,  profits,  and 
wages.  A  market-gardener  may  own  a  piece  of  land  and 
the  cai)ital  used  in  cultivating  it,  and  may  do  all  the 
necessary  work  himself.  Then  he  gets  rent,  profits  and 
wages.  That  is,  all  the  wealth  produced  by  his  land, 
his  capital  and  his  labor  belongs  to  him. 

Therefore,  wealth  is  sometimes  shared  between  three 
classes,  and  sometimes  between  two,  and  is  sometimes 
absorbed  by  one. 

PROPOSITION   XXV. 

The  first  law  of  supply  and  demand  fixes  the  proportion  of 
rent,  profits  and  wages  to  each  other. 

If  there  is  a  great  deal  of  land  seeking  employment 
and  a  comparatively  small  demand  for  land,  then  (Prop. 
VI)  the  price  paid  for  its  use  will  be  small,  and  therefore 
the  rent  will  take  but  a  small  part  of  the  product.  If 
the  supply  of  land  does  not  equal  the  demand  for  it,  then 
(Prop.  VI)  the  rent  will  be  a  larger  i)art  of  the  product. 

In  the  same  way,  the  ratio  of  demand  to  supply  will 
decide  what  part  of  the  product  shall  be  u.sed  to  pay 
profits,  and  what  part  to  pay  wages. 

Therefore,  the  first  law  of  supply  and  demand  fixes 
the  proportion  of  rent,  profits  and  wages  to  each  other. 

DEFINITION    12.     Value  is  purchasing  power. 

The  value  of  a  thin;^  is  its  power  of  purchasing  other  things. 
If  a  yard  of  velvet  will  buy  two  yards  of  broadclotii,  or  three 
yards  of  linen,  the  value  of  velvet  is  twice  that  of  broadcloth 


PRIMER  OF  POLITICAL   ECONOMY.  49 

and  thrice  th:it  of  linen.     If  a  pound  of  tea  will  exchange  for 
three  pounds  of  coiYee,  the  value  of  tea  is  thrice  that  of  cofVee. 

The  value  of  a  thing  is  always  found  by  comparing  it  with 
other  things. 

DEFINITION   13.    Price  is  value  expressed  in  money. 

For  the  sake  of  convenience,  one  universal  standard  ot  value 
has  been  taken.  This  standard  is  money.  It  is  a  common  de- 
nominator of  values.  Instead  of  saying  that  the  value  of  a 
pound  of  tea  is  three  times  the  value  of  a  pound  of  cofiee,  we 
say  that  tea  is  worth  90  cents  and  coffee  30  cents  a  pound. 

"When  the  value  of  a  thing  is  expressed  in  money,  it  is  called 
its  price. 

PROPOSITION   XXVI. 
There  cannot  be  a  general  rise  or  fall  in  values. 

Suppose  there  were  only  two  things  in  the  world,  one 
named  A  and  the  other  B.  There  could  not  be  a  gen- 
eral rise  in  their  value.  For  the  value  of  a  thing  (Def. 
12)  is  its  power  of  purchasing  other  things.  If  A  rises 
in  value,  it  must  buy  more  of  B.  Then  it  will  take  more 
of  B  to  buy  A.  B's  value  will  therefore  be  less.  Thus,. 
if  A  rises  in  value,  B  must  fall  in  value.  And  if  B  rises 
in  value,  it  must  buy  more  of  A.  That  is,  A  must  fall  in 
value.  Since  each  must  fall  in  order  that  the  other  may 
rise,  in  value,  they  cannot  rise  together. 

What  is  thus  true  of  two  things  is  equally  tnie  of 
three,  four  and  all  things.  In  order  that  one  may  rise 
in  value,  others  must  fall.  And  so,  if  one  falls  in  value, 
others  must  rise.  For  the  one  will  then  have  less  pur- 
chasing power.  That  is,  it  will  1  iv  less  of  other  com- 
modities. The  others,  then,  will  buy  more  of  it.  They 
will  therefore  have  more  value. 

Suppose  one  pound  of  tea  will  buy  three  pounds  of 
coffee  or  four  pounds  of  sugar.  Their  values,  compared 
with  each  other,  cannot  all  rise  together  ;  for  if  tea  grows 
so  dear  that  one  pound  of  it  will  buy  four  pounds  of 
coffee  or  five  pounds  of  sugar,  then  the  value  of  coffee 
4 


60  PRIMER  OF  POLITICAL  ECONOMY. 

and  sugar  has  fallen.  It  takes  more  of  each  of  them  to 
buy  a  pound  of  tea. 

Thus,  in  order  that  one  thing  may  rise  in  value,  others 
must  fall.     And  vice  versa. 

Therefore,  there  cannot  be  a  general  rise  or  fall  in 
values. 

PROPOSITION   XXVII. 

There  may  be  a  general  rise  or  fall  in  prices. 

One  thing  may  rise  in  value,  but  in  order  that  it  may 
do  so,  other  things  (Prop.  XXVI)  must  fall.  If  money 
rises  in  value,  it  will  take  less  of  it  to  buy  other  com- 
modities. Therefore,  general  prices  will  fall.  If  money 
falls  in  value,  it  will  take  more  of  it  to  buy  other  com- 
modities.    Therefore,  general  prices  will  rise. 

If  tea  has  been  selling  for  90  cents,  coffee  for  30,  and 
sugar  for  221^,  a  pound,  and  a  scanty  supply  (Prop.  VI) 
forces  their  prices  up  to  $1.80,  60  and  45  cents  a  pound, 
the  value  of  money,  so  far  as  they  are  concerned,  will 
have  fallen.  A  dollar  will  not  exchange  for  as  much  of 
them  as  it  used  to.  There  has  been  a  general  rise  in 
their  prices,  but  there  has  been  neither  rise  nor  fall  in 
their  values,  compared  with  each  other.  For  a  pound  of 
tea,  before  the  rise  in  price,  would  have  bought  three 
pounds  of  coffee  or  four  of  sugar,  and  it  will  buy  pre- 
cisely the  same  amount  now. 

Therefore,  there  may  be  a  general  rise  or  fall  in 
prices. 

PROPOSITION    XXVIII. 
The  value  of  a  thing  depends  upon  the  cost  of  its  production. 

No  commodity  will  be  produced  unless  there  is  a  de- 
mand (Def.  6)  for  it.  Neither  will  a  commodity  be  pro- 
duced unless  those  who  want  it  are  willing  to  give  in 
exchange  for  it  something  of  equal  value.     For,  since  it 


PRIMER  OF  POLITICAL  ECONOMY.  61 

always  costs  something  to  produce  a  commodity,  the 
producer  will  not  be  willing  to  exchange  it  for  less  than 
it  cost  him.  This  cost  is  called  the  cost  of  production. 
Since  the  article  will  not  be  exchanged  for  less  than  its 
cost  of  production,  its  value  (Def.  12)  must  depend  upon 
this. 

The  cost  of  production  consists  of  the  limited  natural 
agents  used  up,  the  mental  and  bodily  labor  expended, 
and  the  capital  consumed,  in  the  production.  Both  the 
labor  and  the  wages  paid  for  it  are  to  be  reckoned,  for  the 
first  is  the  sacrifice  or  cost  of  the  laborer,  and  the  second 
is  part  of  the  sacrifice  or  cost  of  the  capitalist. 

The  cost  of  production  fixes  the  intrinsic  value,  that 
is,  the  value  at  which  the  article  can  be  exchanged 
without  loss.  Its  market  value  is  somewhat  greater  than 
this,  because  the  capitalist  sells  it  at  a  profit.  If  he 
made  no  profit,  he  would  not  care  to  use  his  capital  in 
producing  the  commodity. 

Intrinsic  value  is  fixed.  Market  value  varies  with 
supply  and  demand  (Prop.  VI).  It  may  sometimes  even 
fall  below  intrinsic  value,  but  if  it  does  so  for  any  length 
of  time,  production  (Prop.  VII)  will  slacken  and  the 
consequent  diminished  supply  (Prop.  VI)  will  send  up 
the  market  value  again. 

Therefore,  the  value  of  a  thing  depends  upon  the  cost 
of  its  production. 

PROPOSITION  XXIX. 

In  every  fair  bargain,  both  parties  gain. 

One  man's  gain  cannot  be  another  man's  loss,  in  trade, 
except  in  cases  of  ignorance  or  deceit. 

If  a  man  in  England  exchanges  steel  for  cotton  with  a 
man  in  America,  each  is  a  gainer.  The  value  of  the 
steel  is  equal  to  the  value  of  the  cotton,  or  the  exchange 
would  not  be  made.  Each  now  has  what  he  wants, 
whereas  each  before  had  what  he  \vanted  to  part  with. 


52  PRIMER  OF  POL/rrCAL  ECONOMT. 

The  Englishman  wanted  the  cotton  more  than  he  did 
the  steel.  The  American  wanted  the  steel  more  than  he 
did  the  cotton.  Each  has  his  greater  want  gratified. 
So  both  have  gained. 

What  is  true  of  the  Englishman  and  the  American  is 
true  of  the  New  York  merchant  and  the  Iowa  farmer,  or 
of  a  million  Englishmen  and  a  million  Americans. 

Therefore,  in  every  fair  bargain,  both  parties  gain. 


PROPOSITION  XXX. 

The  first  method  of  exchange,  barter,  is  unfit  for  use  in  a 
civilized  community. 

Barter  is  the  exchange  of  one  thing  for  another  with- 
out the  use  of  money.  This  was  the  first  method  of 
exchange.  It  is  the  way  in  which  all  buying  and  selling 
is  still  carried  on  in  some  barbarous  communities.  If  a 
savage  has  more  food  than  he  can  eat,  he  exchanges  the 
surplus  for  something  he  needs, —  a  skin  or  a  bow  and 
arrows. 

This  method  of  exchange  is  inconvenient.  It  would 
not  be  practicable  among  civilized  people, 

A  tailor  has  only  clothes  to  sell.  If  he  wanted  a  loaf 
of  bread  and  barter  still  prevailed,  he  would  have  to 
offer  a  baker  some  article  of  clothing,  a  coat  for  instance, 
in  exchange  for  bread.  But  probably  the  baker  would 
have  all  the  coats  he  needed.  He  might  say  he  wanted 
a  stove.  Then  the  tailor  would  have  to  find  a  stove- 
maker  who  was  willing  to  exchange  a  stove  for  a  coat; 
get  a  stove  in  this  way;  and  then  give  the  baker  the 
stove  for  the  bread.  If  he  could  find  no  such  stove- 
maker,  he  would  have  to  hunt  for  another  baker.  "  He 
might  starve  before  he  could  find  any  person  having 
bread  to  sell  who  wanted  a  coat ;  besides,  he  would  not 
want  as  much  bread  at  a  time  as  would  be  worth  a  coat, 
and  the  coat  could  not  be  divided."* 

•John  Stuart  Mill." 


PRIMER  OF  POLITICAL  ECONOMY.  53 

What  is  true  of  the  exchange  between  the  tailor  and 
the  baker  is  true  of  all  other  exchanges.  It  is  easy  to 
see,  then,  that  barter  hinders  trade. 

Therefore,  the  first  method  of  exchange,  barter,  is 
unfit  for  use  in  a  civilized  community. 

PROPOSITION   XXXI. 

The  great  instrument  of  exchange  is  money. 

The  impossibility  of  carrying  on  trade  in  civilized 
countries  by  barter  made  the  introduction  of  money 
a  necessity.  Money  is  the  great  medium  of  exchange. 
Whoever  has  enough  money  can  buy  whatever  is  offered 
for  sale. 

The  tailor  mentioned  in  the  last  proposition  could  get 
the  bread  he  wanted  of  the  baker  if  he  had  money.  It 
is  by  means  of  money  that  the  lawyer  exchanges  his 
legal  ability  for  his  food,  clothing,  rent,  etc.,  and  that  a 
teacher  exchanges  his  learning  for  rent,  groceries,  clothes, 
etc.  The  teacher  first  sells  his  learning  for  money,  and 
then  he  sells  his  money  for  groceries,  clothes,  fuel,  the 
use  of  a  house,  etc. 

The  same  thing  is  true  of  all  civilized  men.  Take  the 
case  of  a  shoe-dealer.  His  wealth  is  in  shoes.  Through 
the  medium  of  money,  he  exchanges  his  shoes  for  what- 
ever he  wants.  He  sells  his  shoes  for  money,  and  then 
sells  the  money  for  leather,  or  bread,  or  a  ticket  to  a  con- 
cert, or  anything  else. 

Therefore,  the  great  instrument  of  exchange  is  money. 

PROPOSITION   XXXII. 

Money  is  the  measure  of  values. 

Lengths  are  measured  by  inches,  feet,  yards,  etc.; 
weights  by  ounces,  pounds,  etc. ;  time  by  minutes,  hours, 
days,  and  years ;  and  values  are  measured  by  money. 

Money  may  therefore  be  defined  as  the  medium  of 
exchange  and  the  measure  of  values. 


54  PRIMER  OF  POLITICAL   ECONOMT. 

If  there  were  no  measure  of  values,  it  would  be  diffi- 
cult to  tell  at  any  time  how  much  of  one  commodity 
should  be  given  in  exchange  for  another.  It  would  be 
impossible  to  know  how  much  any  man  was  worth  with- 
out naming  all  the  things  he  owned,  one  after  another. 

When  the  tailor  wishes  to  let  his  customer  know  the 
value  of  a  coat,  he  expresses  that  value  in  money.  When 
a  man  wishes  to  tell  how  rich  he  is,  he  expresses  it  in 
money,  too. 

Therefore,  money  is  the  measure  of  values. 

PROPOSITION   XXXIII. 

Money  in  specie  is  like  all  other  commodities. 

Money  in  specie  is  gold  or  silver  money.  Paper 
money  is  not  specie.  Specie  money  is  a  commodity  like  all 
other  commodities.  Gold  and  silver,  whether  coined  or 
not,  are  commodities,  just  as  iron  and  lead  are. 

The  value  of  specie  depends  upon  the  cost  of  pro- 
duction, as  the  value  of  all  other  commodities  does. 
The  value  of  specie  money  is  the  value  of  the  metal  com- 
posing it,  and  the  cost  of  coining  it.  The  value  of  the 
metal  depends  upon  the  cost  of  producing  it,  that  is,  the 
cost  of  getting  it  out  of  the  mine  and  of  freeing  it  from 
impurities. 

The  value  of  specie  is  affected  by  demand  and  supply, 
just  as  all  other  values  are.  If  the  stock  of  gold  greatly 
increases,  an  ounce  of  gold  will  exchange  for  less  food, 
clothes,  or  anything  else.  If  the  stock  of  gold  decreases, 
an  ounce  of  it  will  exchange  for  more  food,  clothing,  etc. 

All  the  other  natural  laws  affecting  commodities 
apply  to  gold  and  silver. 

Therefore,  money  in  specie  is  like  all  other  com- 
modities. 


PRIMER  OF  POLITICAL  ECONOMY.  55 

PROPOSITION   XXXIV. 

Gold  and  silver  make  the  best  money. 

The  thing  which  is  to  serve  as  money  should  — 
(i)  have  large  value  in  small  space  and  weight,  be- 
cause otherwise  nobody  could  carry  about  with  him 
enough  to  buy  what  he  needed,  from  time  to  time ;  and 
if  he  bought  on  credit,  much  time  and  labor  would  have 
to  be  spent  in  finally  taking  a  large,  heavy  substance  to 
the  stores  in  settlement  of  the  bills ; 

(2)  be  steady  in  value,  because  something  which 
changes  its  own  value  continually  cannot  measure  the 
values  of  other  things; 

(3)  be  durable,  for  if  it  continually  wasted  away  its 
value  would  diminish  every  day  and  every  minute; 

(4)  be  indefinitely  divisible,  for  otherwise  it  could  not 
represent  small  values,  and  change  could  not  be  made ; 

(5)  be  capable  of  receiving  and  retaining  delicate 
marks,  in  order  that  the  different  pieces  of  money  should 
be  readily  recognized,  even  after  they  have  been  used  for 
a  long  time; 

(6)  be  easily  distinguished  even  from  similar  sub- 
stances, for  otherwise  counterfeits  will  be  put  in  circula- 
tion by  bad  men  ;  and 

{7)  be  recognized  as  money  by  the  civilized  world, 
because  it  has  to  be  used  to  make  exchanges  between 
citizens  of  different  nations  as  well  as  between  those  of 
the  same  nation. 

Gold  and  silver  fulfill,  better  than  any  other  known 
substance,  these  seven  requisites  for  money : 

(i)  They  have  large  value  in  small  space  and  weight. 
No  other  substance,  which  exists  in  sufficient  quantity 
to  be  used  as  money,  contains  as  much  value  as  gold 
does  in  equal  space  and  weight. 

(2)  They  are  steady  in  value.  Since  history  began, 
there  has  been  only  one  considerable  change  in  their 
value.  This  was  after  the  discovery  of  the  South  Amer- 
ican and  the  Mexican  mines.    Even  then,  the  change  was 


56  PRIMER  OF  POLITICAL  ECONOM2'. 

not  at  all  sudden.  It  took  a  great  number  of  years  to 
accomplish  it.  All  other  commodities  have  undergone 
repeated  and  sudden  changes  in  value.  It  costs  just 
about  as  much  now  to  extract  an  ounce  of  gold  or  silver 
from  the  earth,  purify  it  and  coin  it  as  it  has  cost  for  very 
many  years.  Since  the  cost  of  production  is  steady,  the 
value  (Prop.  XXVIII)  must  be  steady. 

(3)  They  are  very  durable.  Coins  buried  for  ages 
have  been  dug  up  in  Egypt  which  retain  their  former 
color  and  designs  almost  perfectly. 

(4)  They  are  indefinitely  divisible.  They  lose  noth- 
ing, too,  by  being  divided.  An  ounce  of  gold  is  worth 
just  as  much,  no  matter  into  how  many  pieces  it  is 
divided.  If  a  large  diamond  were  quartered,  it  would 
lose  99  per  cent,  of  its  value. 

(5)  They  can  be  easily  coined,  and  they  retain  the 
forms  and  designs  given  them  for  a  very  great  number  of 
years. 

(6)  They  cannot  be  easily  imitated.  Counterfeits  of 
them,  though  made  with  cunning  care,  can  be  readily 
detected.  The  "  ring "  of  gold  and  silver  cannot  be 
produced  by  any  baser  metal. 

(7)  They  are  the  only  substances  recognized  as  money 
by  the  whole  civilized  world. 

Therefore,  gold  and  silver  make  the  best  money. 


PROPOSITION   XXXV. 

Paper  money,  not  convertible  into  specie  at  par,  is  an  evil. 

The  measure  of  length  must  have  length  ;  the  measure 
of  weight  must  have  weight ;  the  measure  of  values 
must  have  value.  Paper  money  has  only  a  sham 
value,  unless  it  is  convertible  into  specie  at  par.  If 
you  can  get  a  gold  dollar  by  presenting  a  paper  dollar 
at, the  bank  which  issues  it,  then  paper  is  as  good  as 
gold,  because  everything  is  worth  what  it  will  exchange 
for.     Paper  is  more  convenient  to  carry  than  gold.     This 


PRIMER  OF  POLITICAL  ECONOMY.  57 

is  the  reason  it  is  used  by  communities  whose  paper- 
money  is  convertible  into  specie. 

Inconvertible  paper  money  has  a  sham  value,  because 
the  value  at  which  it  exchanges  does  not  depend  upon 
its  cost  of  production.  It  costs  only  about  one  mill  to 
produce  a  paper  dollar.  The  reason  it  exchanges  for 
more  than  one  mill  is  because  the  bank  or  government 
issuing  it  promises  to  redeem  it  in  specie  some  time. 
The  chance  of  its  being  worth  par  in  gold  some  time 
makes  it  worth  something  in  gold  now.  But  since  its 
value  depends  upon  this  chance,  it  must  change  with 
the  chance.  The  chance  changes  from  day  to  day,  and 
so  the  value  of  paper  money  changes. 

This  changing  value  makes  it  unfit  to  measure  values, 
just  as  a  stick  which  was  30  inches  long  to-day  and  25 
to-morrow  and  27  the  day  after,  would  be  unfit  to 
measure  length. 

If  it  cannot  measure  values  accurately,  it  cannot  be  a 
good  medium  of  exchange.  Suppose  the  tailor  is  willing 
to  sell  a  coat  for  $20  in  gold,  he  will  not  take  $20  in 
inconvertible  paper  for  it,  because  the  value  of  such 
money  changes  from  day  to  day,  and  so  the  $20  bill  may 
not  be  worth  as  much  as  a  $20  gold  piece  to-morrow. 
If  %\  in  paper  is  worth  that  day  50  cents  in  gold,  he  will 
charge  about  1^45  for  the  coat.  The  $40  will  equal  the 
$20  gold  piece,-  and  the  extra  $5  will  be  a  protection 
against  his  losing  very  much  if  the  paper  loses  any  more 
value.  If  a  paper  dollar  is  worth,  the  day  after  he  sells 
the  coat,  only  40  cents  in  gold,  then  his  $45  is  worth  only 
(45X40  cents  =  )  $18,  and  he  has  then  exchanged  the 
coat  for  %2  less  than  its  value,  despite  his  extra  charge 
of  ^5.  If  he  had  not  made  this  extra  charge,  what  he 
got  in  exchange  for  the  coat  would  be  worth  only 
(40X40  cents  =  )  $16.     Then  his  loss  would  be  $4. 

When  the  money.used  by  a  nation  changes  value  in  this 
way,  all  dealers  make  this  extra  charge  to  protect  them- 
selves against  loss  in  case  the  paper  loses  any  more  value. 
They  sell    their  wares    for   as   much    paper   money  as 


58  PRIMER  OF  POLITICAL  ECONOMT. 

will  buy,  that  day,  the  gold  which  the  wares  are  worth, 
plus  sometliing  more  as  an  insurance  against  loss  by  the 
depreciation  of  the  paper.  The  wholesale  dealer  charges 
this  increased  price  to  the  retailer;  the  retailer  charges 
\i,pliis  his  own  increased  price,  to  the  consumer.  The 
consumer  therefore  finally  pays  all  these  extra  charges, 
all  of  which  he  would  escape,  if  the  currency  used  were 
gold  or  silver,  or  paper  convertible  into  specie  at  par. 
Poor  people  usually  buy  their  goods  of  the  last  of  a  long 
line  of  wholesale  and  retail  dealers.  Each  one  of  the 
line  has  charged  this  extra  price.  The  poor  therefore 
suffer  most,  in  this  as  in  other  ways,  from  the  use  of  in- 
convertible paper  money. 

Such  money  has  a  large  (sham)  value  in  small  space 
and  weight,  but  if  the  chance  of  its  being  some  time  re- 
deemed in  specie  ceases  to  exist,  then  its  market  value 
falls  to  the  level  of  its  intrinsic  value  (see  explanation 
of  Prop.  XXVIII),  and  every  note,  whether  for  one  or 
one  thousand  dollars,  is  worth  about  one  mill.  Incon- 
vertible paper  money  is  very  unsteady  in  value.  The 
greenback  dollar  has  varied  in  value  all  the  way  from  $i 
to  35  cents  in  gold.  Such  money  is  not  very  durable. 
It  can,  to  be  sure,  be  divided  indefinitely.  The  stamps 
on  it  soon  wear  away.  It  can  be  counterfeited  with 
comparative  ease.  It  circulates  as  money  only  within 
the  country  of  the  government  issuing  it.  When  a  bank 
issues  it,  it  circulates  only  near  that  bank.  It  forms  no 
part  of  the  world's  money. 

Therefore,  paper  money,  not  convertible  into  specie  at 
par  is  an  evil. 


PROPOSITION   XXXVI. 

The  worse  currency  drives  out  the  better. 

When  there  are  two  legal  sorts  of  currency  in  a 
country,  the  worse  will  drive  out  the  better.  Gold  and 
greenbacks  are  both  legal  mediums  of  exchange  in  this 


PRIMER  OF  POLITICAL  ECONOMT.  59 

country  now  (1875),  but  the  greenbacks,  which  are  the 
worse  currency,  have  driven  out  the  gold. 

Suppose  a  shoe-manufacturer  borrowed  $100  in  gold 
when  we  had  a  gold  currency,  and  must  repay  the  loan 
now  (1875),  when  a  gold  dollar  is  worth  $1.12  in  green- 
backs. His  shoes  will  sell  for  %2  a  pair  in  gold,  and 
about  $2. 50  a  pair  in  greenbacks.  If  he  pays  the  debt 
in  gold  he  will  have  to  part  with  fifty  pairs  of  shoes.  If 
he  pays  it  in  greenbacks  he  w-ill  have  to  part  with  only 
40  pairs.  It  wall  therefore  be  cheaper  for  him  to  use 
greenbacks.  The  creditor  w'ill  lose  by  it  though,  because 
he  lent  $100  in  gold  and  he  gets  "back  $100  in  green- 
backs, which  are  worth  only  about  $89  in  gold.  It  is 
one  bad  result  of  a  double  currency  that  debtor  can 
thus  defraud  his  creditor. 

When  a  debtor  has  to  pay  his  debt,  and  can  pay  it  in 
a  bad  and  cheap  or  a  good  and  costly  currency,  he  will 
use  the  cheap  currency.  Every  debtor  will  do  this. 
There  will  therefore  be  no  demand  for  the  good  cur- 
rency, and  it  will  disappear  from  the  market. 

Therefore,  the  worse  currency  drives  out  the  better. 

PROPOSITION  XXXVII. 

Credit  is  not  capital. 

Capital  (Def.  4)  is  wealth  saved  and  used  in  production. 
Credit  has  not  been  saved.  When  a  bank  or  a  government 
issues  a  note  of  $100,  no  capital  has  been  created. 
The  note,  if  convertible  into  specie,  represents  specie 
and  is  as  good  as  specie,  but  issuing  it  has  not  created 
the  specie  it  represents.  That  existed  already.  Issuing 
the  note  has  merely  changed  the  owner  of  the  specie. 
A  has  $ioo  in  gold.  He  gives  B  in  exchange  for  food, 
clothing,  etc.,  his  promise  to  pay  $100.  The  total  capi- 
tal of  the  two  is  still  only  $100,  plus  the  food  and 
clothing  unconsumed,  but  now  B  owns  the  $100  instead 
of  A.  B  can  claim  it  from  A  at  any  time.  There  has 
therefore  been  no  creation  of  capital  by  creating  credit. 


60  PRIMER  OF  POLITICAL  ECONOMT. 

Credit  is  not  in  itself  capital.  It  is  a  lease  of  capital 
which  enables  a  man  to  get  the  use  of  capital  for  a  time, 
just  as  a  lease  written  on  a  piece  of  parchment,  which  is 
not  land,  enables  its  holder  to  occupy  and  use  land,  for 
the  time. 

The  creation  of  credit  transfers  the  use  of  capital.  A 
has  $ioo.  He  lends  it  to  B,  taking  in  return  B's  written 
promise  to  pay  him  (A)  $ioo,  with  interest,  at  some 
future  time.  Thus  A's  giving  B  credit  has  transferred 
the  use  of  A's  money  to  B.  It  has  not  created  any  more 
money  or  wealth.  But  if  credit  were  capital,  the  world's 
wealth  would  now  be  increased  by  $ioo,  since  all  capital 
is  wealth. 

If  there  were  no  credit,  there  could  be  no  lenders,  and 
therefore  no  borrowers.  Only  those  who  could  use 
capital  for  their  own  purposes  would  accumulate  it  at  all. 
Credit,  by  transferring  the  use  of  wealth  from  those  who 
would  not  use  the  wealth  productively  to  those  who  will, 
makes  the  wealth  capital.  But  it  is  not  itself  capital, 
because  it  is  not  wealth  that  has  been  saved. 

Therefore,  credit  is  not  capital. 

PROPOSITION   XXXVIII. 

A  commercial  crisis   is  caused  by  the  destruction,  that  is, 
the  unproductive  consumption,  of  wealth. 

There  are  times  when  credit  ceases;  when  prices 
suddenly  fall ;  when  merchants  fail ;  when  manufactures 
slacken ;  when  wages  decline  and  great  numbers  of  la- 
borers are  thrown  out  of  emi)loyment ;  and  when  bankers 
cease  to  loan  money,  and  are  unable  to  pay  back  the 
deposits  which  have  been  made  at  their  banks.  When 
this  state  of  things  exists,  there  is  said  to  be  a  commercial 
crisis. 

Let  us  see  what  causes  all  this.  It  is  at  the  banks 
that  a  crisis  first  shows  itself.  We  will  best  understand 
what  a  crisis  is,  therefore,  by  beginning  to  study  it  at  the 
banks. 


PRIMER  OF  POLITICAL  ECONOMT.  61 

Banks  gather  up  the  savings  which  are  made  by  one 
clasb  of  the  community  and  loan  them  to  another  class 
to  be  employed  in  the  production  of  wealth.  Every 
$i,ooo  loaned  by  the  savings  banks  is  said  to  give  em- 
ployment, on  an  average,  to  one  laborer.  Let  us  sup- 
pose that  one  thousand  persons  each  deposit  $i,ooo  in  a 
bank  for  safe-keeping.  If  it  is  left  on  deposit  long 
enough,  the  bank  will  pay  the  owner  4  or  5  per  cent, 
interest  on  it.  but  the  bank  must  make  more  than  4  or 
5  per  cent.,  by  loaning  the  deposit.  If  it  did  not,  it 
would  lose  money.  It  therefore  loans  its  deposits  at  8 
or  10  or  12  per  cent,  to  persons  employed  in  the  produc- 
tion of  wealth.  Its  profit  consists  in  the  difference  be- 
tween the  interest  it  pays  and  the  interest  it  gets. 

Let  us  suppose  that  the  $1,000,000  deposited  by  the 
thousand  persons  is  loaned  out  to  build  a  railroad. 
Then  this  amount  of  capital  takes  the  form  of  a  railroad. 
If  the  railroad  was  wanted,  the  company  that  built  it 
will  be  repaid  by  the  receipts  from  freights,  fares,  etc. 
The  company  can  therefore  repay  the  banker,  and  the 
banker  his  depositors.  But  if  the  railroad  has  been 
built  where  it  was  not  needed,  so  that  no  use,  or  very 
little  use,  is  made  of  it  after  it  is  built,  then  the  company 
will  receive  nothing  or  almost  nothing  from  freights, 
fares,  etc.  It  will  therefore  be  unable  to  pay  the  banker, 
and  the  banker  therefore  cannot  pay  his  depositors. 

What  is  the  consequence  of  this .'' 

The  depositors  run  to  the  bank.  The  bank  cannot 
pay  them.  It  closes.  The  railroad  company  can  get  no 
more  loans.  It  Ixas  to  stop  work.  The  labor  employed 
in  taking  care  of  the  part  of  the  road  already  built,  and 
in  building  the  other  part  is  thrown  out  of  work.  There 
is  now  less  demand  for  rails,  locomotives,  cars,  etc.  The 
manufacturers  of  these  things  dismiss  some  of  their 
hands  and  slacken  work.  But  if  less  railroad  iron  is 
wanted,  fewer  men  will  be  wanted  to  work  the  iron  mines 
and  to  carry  the  ore  from  the  mines  to  the  places  where 
it  is  made  into  rails,  locomotives,  car-wheels,  etc.     This 


62  PRIMER  OF  POLITICAL  ECONOMY. 

has  all  happened  because  a  railroad  was  produced  which 
was  not  needed,  that  is,  because  $1,000,000  of  deposits 
was  consumed  unproductively,  or  destroyed ;  for  unpro- 
ductive consumption  and  destruction  are  the  same. 

The  unproductive  consumption  of  the  $1,000,000  has 
had  several  bad  effects  : 

i)    It  caused  the  bank  to  close; 
)    It  made  the  depositors  lose  their  money; 

(3)  It  threw  railroad  employees  out  of  work; 

(4)  It  stopped  the  iron  works  where  railroad  iron  was 
being  manufactured; 

(5)  It  diminished  the  demand  for  iron  at  the  mines; 

(6)  It  threw  out  of  employment  a  number  of  miners, 
ore -carriers  and  iron-workers ; 

(7)  It  slackened  all  kinds  of  business,  for  the  laborers 
thrown  out  of  employment  could  not  buy  of  the  grocer, 
dry  goods  merchant,  shoemaker,  etc.,  as  before ; 

(8)  Consequently,  the  retail  grocer,  shoemaker,  etc., 
were  unable  to  buy  of  the  wholesale  dealers  in  groceries, 
boots  and  shoes,  etc. 

(9)  Therefore,  the  wholesale  dealers  stopped  buying, 
and  the  demand  for  all  these  articles  was  less,  and  con- 
sequently the  production  of  them  diminished. 

All  these  evils,  then,  felt  throughout  the  whole  com- 
mercial body,  have  resulted  from  the  destruction  of  the 
§1,000,000  worth  of  capital.  The  dollars  themselves 
have  not  been  consumed,  but  the  food  and  clothing  of 
the  laborers  they  hired,  and  the  wood,  rails,  bridges, 
rolling-stock,  etc.,  which  they  bought  have  all  been  spent 
without  producing  wealth.  Thus,  although  the  dollars 
themselves  are  still  in  existence,  $1,000,000  worth  of 
capital  has  been  destroyed. 

Now  we  have  only  to  suppose  that  a  great  many 
millions  have  been  consumed  unproductively  in  a  great 
many  other  ways  in  order  to  account  for  all  these  effects 
on  a  greater  scale.  But  when  these  things  happen  on  a 
great  scale,  we  have  a  commercial  crisis. 

Therefore,  a  commercial  crisis  is  caused  by  the  destruc- 
tion, that  is,  the  unproductive  consumption,  of  wealth. 


PRIMER  OF  POLITICAL  ECONOMY  63 


PROPOSITION  XXXIX. 

The  effects  of  a  commercial  crisis  can  be  removed  only  by 
the  production  of  wealth. 

The  destruction  of  wealth  (Prop.  XXXVIII)  causes  a 
crisis ;  the  production  of  wealth,  therefore,  by  removing 
the  cause,  must  remove  the  effect, —  that  is,  the  crisis. 

As  wealth  is  produced,  it  is  deposited  in  banks  for 
investment,  or  it  is  used  in  production  without  being 
first  put  in  the  banks.  Then  the  laborers  thrown  out  of 
work  by  the  crisis  are  employed  again.  They  are  there- 
fore able  to  buy  again  of  the  grocer,  baker,  shoemaker, 
etc.  The  latter  buy  fresh  stocks  of  goods  from  the 
wholesale  dealers.  The  wholesalers  in  turn  give  orders 
to  the  producers. 

Thus  business  revives  and  times  are  said  to  be  good. 
Wealth  is  produced  and  the  effects  of  the  crisis  disappear. 

Therefore,  the  effects  of  a  commercial  crisis  can  be 
removed  only  by  the  production  of  wealth. 

DEFINITION  14.  A  tax  is  a  sum  of  money  collected  by 
a  government  from  persons  or  property  within  its  domin- 
ions. 

DEFINITION  15.    Duties  are  taxes  on  imported  goods^ 
that  is,  on  goods  brought  from  other  countries. 

DEFINITION   16.    A  tariff  is  a  law  fixing  duties. 

There  are  two  kinds  of  tariffs, —  revenue  and  protective. 

A  revenue  taritY  is  one  the  only  object  of  which  is  to  raise 
money  for  the  needs  of  the  government.  A  country  which  has 
a  revenue  tariff'  is  said  to  enjoy  "  free  trade."  Its  government 
does  not  interfere  with  its  trade  with  foreign  countries  except 
for  the  sake  of  raising  needed  revenue. 

A  protective  tariff  is  one  which  fixes  duties  in  such  a  way 
that  the  home  manufacturer  can  afford  to  produce  and  sell  a 
commodity  more  cheaply  than  it  can  be  sold  after  it  has  been 
imported,  and  the  duty  on  it  has  been  paid.     The  home  manu- 


64  PRIMER  OF  POLITICAL  ECONOMY. 

facturer  is  then  said  to  be  "  protected  "  against  the  competition 
of  his  foreign  rivals. 

A  revenue  tariff  is  for  the  benefit  of  the  government.  A  pro- 
tective tariff,  while  it  yields  some  re\-enue  to  the  government,  is 
mainly  for  the  benefit  of  the  manufacturers. 


PROPOSITION   XL. 

A  tariff  should  be  for  revenue  alone. 

A  protective  tariff  is  an  injustice  and  a  hardship.  An 
illustraiion  will  suffice  to  show  what  is  meant  by  this. 
Suppose  a  man  wants  to  buy  cloth  with  which  to  make  a 
coat.  England  manufactures  some  of  the  best  cloth  in 
the  world.  He  says  he  will  buy  English  cloth.  It  is 
better  and  cheaper.  Now  if  trade  were  free,  he  might 
buy  the  cloth,  we  will  say,  for  %\  a  yard  when  imported 
here.  American  cloth  of  perhaps  not  as  good  quality  is 
selling  for  $1.50  a  yard.  To  keep  him  from  purchasing 
the  English  cloth,  and  to  compel  him  to  buy  the  Ameri- 
can, the  government  adds  to  the  price  of  the  English 
cloth,  say  60  cents,  as  an  extra  duty.  It  is  now  worth 
$1.60,  which  is  more  than  the  buyer  can  afford  to  pay. 
He  therefore  buys  the  American  cloth  for  $1.50. 

Now,  who  has  been  the  gainer  by  this.''  The  Ameri- 
can manufacturer.  The  buyer  has  lost  50  cents  on  each 
yard.  And  as  the  manufacturers  are  few,  while  those 
who  use  cloth  are  many,  the  whole  country  is  made  to 
pay  out  large  sums  by  a  protective  tariff  for  the  benefit 
of  the  few.  This  is  why  a  protective  tariff  is  an  injustice 
and  a  hardship. 

There  are  other  reasons  why  trade  between  different 
countries  should  be  free. 

When  it  is  free,  each  country  produces  those  things  for 
which  it  is  best  adapted,  that  is,  which  it  can  produce 
cheapest  and  best.  France  can  produce  very  good  and 
very  cheap  silk.  England  is  not  adapted  to  the  cul- 
tivation of  the  mulberry-trees  on  which  the  silk-worms 
feed,  and  therefore  cannot  well  produce  good  silk.     But 


PRIMER  OF  POLITICAL  ECONOMi'.  65 

it  can  produce  very  good  and  very  cheap  tutlery.  It  is 
best  then  that  it  should  produce  good  cutlery  and  ex- 
change it  for  good  French  silk.  If  each  country  had  to 
produce  its  own  silk  and  its  own  cutlery,  the  result  would 
be  that  France  would  have  some  verj^  poor  but  very  dear 
cutlery,  while  England  would  have  some  very  poor  but 
very  dear  silk.  Both  countries  would  suffer,  and  only 
the  few  engaged  in  the  manufacture  of  the  poor  but 
"  protected  "  articles  would  gain. 

The  government  has  no  right  to  tax  one  man  to  benefit 
another.  It  should  treat  all  men  alike.  A  man  has  a 
right  to  buy  wherever  he  can  buy  best  and  cheapest ;  but 
this  right  he  cannot  have  when  trade  is  not  free. 

It  is  claimed  that  a  protective  tariff  benefits  a  country 
by  stimulating  its  manufactures,  and  so  making  it  inde- 
pendent of  other  countries  and  by  securing  employment 
for  its  workpeople. 

But  there  is  no  more  reason  why  a  country  should  buy 
nothing  from  "other  countries  than  there  is  why  a  man 
should  buy  nothing  of  other  men. 

Suppose  a  man  had  to  produce  and  manufacture  his 
own  food,  clothing,  house,  shoes,  books,  church,  and 
everything  else.  He  would  not  produce  nearly  as  much 
wealth  in  a  year  (Prop.  X)  as  if  he  should  make  one 
thing,  shoes  for  instance,  and  sell  them  for  money,  and 
then  sell  the  money  for  his  food,  clothing,  house-rent, 
books,  pew,  etc.  So  a  country,  by  manufacturing  the 
things  which  it  can  manufacture  best,  produces  more 
wealth  than  if  it  were  to  try  to  manufacture  everything. 
It  can  then  exchange  its  surplus  wealth  for  the  special 
products  of  other  countries,  just  as  the  shoemaker  ex- 
changes his  surplus  shoes  for  the  products  of  the  tailor, 
farmer,  etc. 

A  protective  tariff  does  not  increase  the  number  of 
workmen  employed.  It  does  not  increase  the  capital  in 
a  country,  and  it  therefore  cannot  (Prop.  V)  increase 
the  amount  of  labor  employed.  It  is  true  that  if  the 
"  protected  "  commodities  were  produced  abroad  and  im- 

5 


66  PRIMER  OF  POLITICAL  ECONOMT. 

ported,  as  some  of  them  would  be  under  a  revenue 
tariff,  they  would  not  be  produced  at  home,  at  least  in 
such  quantities  as  they  are  when  "protected."  At  least 
part  of  the  labor  now  employed  in  producing  them  at 
home  would  therefore  be  no  longer  employed  hi  that  way. 
It  would,  however,  be  employed  in  another  way.  For, 
in  order  to  pay  for  the  goods  imported,  we  would  have 
to  export  other  goods.  Therefore  there  would  have  to 
be  a  greater  production  of  the  latter.  The  labor  hitherto 
employed  in  jjroducing  at  home  the  goods  now  imported 
from  abroad,  would  now  be  employed  in  producing  the 
goods  exported  to  pay  for  these  imi)orts. 

A  high  tariff  "  protects  "  only  the  manufacturers.  The 
higher  profits  they  make  must  be  paid,  of  course,  by 
the  men  not  engaged  in  manufactures, —  the  ministers, 
lawyers,  teachers,  doctors,  journalists,  grocers,  farmers, 
bakers,  laborers,  etc.,  etc.  The  number  of  persons,  em- 
ployers and  employees,  engaged  in  every  sort  of  manu- 
facture in  this  country  in  1870  was  only  2,707,421.  The 
number  of  farmers  alone  was  5,922,471.  Thus  the  many 
are  taxed  by  a  protective  tariff  for  the  benefit  of  the  few. 

Moreover,  the  persons  engaged  in  manufactures  all 
pay  higher  prices  for  the  manufactured  articles  they  con- 
sume than  they  would  were  there  no  protective  tariff. 
Thus  the  few  who  gain  directly  also  lose  indirectly. 

Again,  the  manufacturers  of  the  protected  commodi- 
ties get  a  higher  profit  than  they  otherwise  would  on 
what  they  sell  in  the  home-market,  but  they  are  restrict- 
ed to  this  market  by  a  protective  tariff  Such  a  tariff 
shuts  them  out  from  the  markets  of  the  world.  American 
axe-manufacturers,  for  instance,  used  to  sell  their  wares 
over  the  whole  world.  Now,  they  cannot  compete  with 
the  English  manufacturers.  For  a  high  tariff  has  made 
some  of  their  raw  materials,  their  machinery  and  their 
labor  cost  so  much  that  they  can  no  longer  produce 
good  axes  as  cheaply  as  the  English  can.  They  are 
therefore  undersold  in  all  foreign  countries,  and  can 
sell  nothing  outside  of  tlie  United  States.     Their  higher 


m 


PRIMER  OF  POLITICAL  ECONOMY.  67 

profits  in  the  home  market  are  often  much  more  than 
counterbalanced  by  their  loss  of  the  profits  they  could 
make,  were  there  only  a  revenue  tariff,  by  foreign  trade. 
Suppose  the  reader,  when  he  next  sits  down  to  break- 
fast, should  think  how  much  has  been  added  to  the  cost 
of  the  things  in  the  room  and  on  the  table  by  the  pres- 
ent protective  tariff.  The  table  on  which  the  breakfast 
is  served  is  taxed  40  per  cent.,  the  table-cloth  42  per 
cent.,  the  dishes,  plates,  cups  and  saucers  46  per  cent., 
the  plated  spoons  35  per  cent.,  the  knives  and  forks  60 
per  cent.,  the  plated  coffee-pot  46  per  cent.,  the  china 
tea-pot  38  per  cent.,  the  salt  60  per  cent.,  the  carpet  on 
the  dining-room  floor  75  per  cent.,  the  stove  45  per  cent., 
the  wall-paper  47  per  cent.,  the  glass  in  the  windows  60 
per  cent.,  and  the  chairs  34  per  cent.*  If  there  were  a 
revenue  tariff,  all  of  these  articles  could  have  been  im- 
ported and  sold  at  prices  much  less  than  we  have  to  pay 
now.  The  American  capital  and  labor  now  employed 
in  producing  some  of  them  would  then  be  used  in  the 
production  of  the  wealth  sent  abroad  in  exchange  for 
them.  Thus,  as  much  capital  and  labor  would  be 
employed  and  we  should  have  to  pay  less  for  many 
necessaries. 

A  protective  tariff  tends  to  keep  foreign  articles  out  of 
the  market.  Americans  produce  similar  articles  and 
sell  them  at  rates  just  below  the  cost  of  the  foreign  pro- 
duct, plus  the  duty.  Thus  a  protective  tariff  yields  the 
government  much  less  money  than  a  revenue  tariff  would. 
It  merely  gives  high  profits  to  a  few,  and  makes  the 
many  pay  much  more  for  the  necessaries  of  life  than 
they  otherwise  would. 

Therefore,  a  tariff  should  be  for  revenue  alone. 

*  These  figures  are  taken  from  the  tariff  of  1875. 


A  Summer  in  Norway. 

With  Notes  on  the  Industries,  Habits,  Customs  and  Peculiarities  of 

the   People,  the   History  and   Institutions   of  the   Country, 

its  Climate,  Topography  and  Productions  ;    also  an 

account  of  the  Red-deer,  Reindeer  and  Elk. 

BY  JOHN  DEAN  CATON,  LL.D. 

Ex-Chief  Justice  of  Illinois. 

8vo.    401  PAGES.     Illustrated.     Price,  $2.50. 

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and  to  understand  and  find  out  more,  than  the  ordinary  traveler.  *  *  Of  all 
this  he  has  made  a  readable  and  entertaining  book  —  a  book  which  is  apt  to 
create  in  the  reader  a  strong  desire  to  make  the  same  journey  in  person." 

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cately told." 

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"Judge  Caton  has  given  us  a  work  possessing  all  the  best  qualities  of  a 
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it  is  written  in  an  easy,  confidential  style,  without  strain  or  affectation.  As  the 
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A  New  and  Cheap  Edition  of 

MEMORIES: 

A  Story  of  German  love. 

TRANSLATED  FROM   THE   GERMAN 

By  Geo.  P.  Upton. 

ibmo.     Red  edges:  flexible  covers:   with  nezv  designs.     Price,  $i.oo. 

Tlie  great  fuvor  with  which  our  Holiday  Edition  of  this 
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hope  that  it  may  reach  the  hands  of  every  lov^r  of  pure  and 
meritorious  literature. 

From  the  New  I'ork   Tribune: 

"  The  touching  story  of  '  German  Love,'  whose  tender  pathos  lacks  only 
the  liarmonies  of  verse  to  make  it  one  of  the  most  exquisite  poems  in  the  Ger- 
man language,  is  here  reproduced  in  an  English  costume  of  chaste  and  delicate 
beauty." 

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higher  assurance  of  the  excellence  of  the  German  than  that  it  is  not  its  inferior 
in  interest  or  poetic  elevation." 

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POEMS 

OF    THE 

FARM  AND  FIRESIDE. 

By  EUGENE  J.  HALL, 
AUTHOR   OF  "A  WINTER'S  NIGHT,"   ETC.,  ETC. 


One  Volume,  8vo,  with  33  Illustrations,         -         I'rice,  $1,75 
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Interior. 

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fi reside . ' ' — Pittsbu rgli  Commercial. 

'•  A  volume  of  short  poems  on  familiar  themes,  wrought  in  fresh  thought, 
and  in  a  language  whose  graceful  beauty  is  its  simplicity.  *  *  They  are  full 
of  pathos,  with  a  sprinkling  of  humor.  It  is  not  too  much  to  say  that  some  of 
them  m.-ike  the  reader  think  that  Carleton's  double  lives  in  Chicago." — Chicago 
Post  and  Mail. 

"  This  is  one  of  the  books  which  we  like  to  commend  for  its  intrinsic  merits, 
and  for  the  pure,  wholesome  influence  it  will  exert  in  the  family,  for  it  will 
'  kindle  a  kindlier  sentiment  and  a  cheerier  vein  of  life '  in  evcrj'  home  where  it 
finds  a  place.  The  publishers  have  issued  it  in  splendid  style,  so  that  it  makes 
a  volume  to  be  prized,  for  both  its  interior  and  exterior  merits." — yournal  of 
Education. 

"  We  find  so  much  to  admire  in  the  author's  fresh  and  vigorous  style,  his 
thorough  knowledge  of  all  that  concerns  the  farmer  and  the  fireside,  his  keen 
sense  of  feeling,  and  artistic  idea  of  how  to  use  it.  that  we  have  read  his  poems 
with  genuine  pleasure,  and  cordially  recommend  them  to  our  readers.  *  *  Mr. 
Hall  possesses  the  power  of  touching  the  feeling  of  his  readers  without  apparent 
effort.  His  poems  express  in  many  ways  the  wants  and  desires  of  the  com- 
munity, and  cannot  fail  to  brighten  an  evening  by  the  crackling  logs,  or  to  while 
away  the  hours  when  work  is  done." — Inter-Ocean, 

Mailed,  post-paid,  on  receipt  of  price  by  the  ptiblishcrs. 

JANSEN,   McCLURG  &  CO., 

CHICAGO. 


TRUTHS  FOR  TO-DAY. 

BY   PROF.    DAVID    SWING. 


A  beautiful  volume,  containing  a  choice  selection  of  the 
finest  discourses  of  this  eloquent  preacher.  i2mo,  tinted  paper, 
325  pages.     Price  $1.50. 

from  the  Neiu  York  Tribune: 

"•  The  preacher  makes  no  display  of  his  rich  resources,  but  you  are  con- 
vinced that  you  are  listening  to  a  man  of  earnest  thought,  of  rare  culture,  and 
of  genuine  humanity.  His  forte  is  evidently  not  that  of  doctrinal  disctission. 
He  deals  in  no  nice  distinctions  of  creed.  He  has  no  taste  for  hair-splitting 
subtleties,  but  presents  a  broad  and  generous  view  of  human  dut}-,  appealing  to 
the  highest  instincts  and  the  purest  motives  of  a  lofty  manhood.  In  his  view, 
the  ethical  element  holds  the  rightful  supremacy  in  our  nature." 

From  Dr.  Powers  in  the  Alliance^  Chicago: 

'*  As  sacred  compositions,  they  captivate  by  a  sweetness  that  is  as  natural 
to  them  as  tints  to  the  rose  or  flavor  to  the  strawberry'.  They  are  logical  with- 
out a  display  of  argumentation,  and  poetical  without  any  sacrifice  of  directness 
and  sincerity.  While  one's  reason  is  appealed  to  all  along,  the  language  of  the 
appeal  comes  up  all  blossoming  and  fragrant  with  the  heart.  It  would  be  hard 
to  find  in  the  same  compass  so  much  real  poetry  and  logic  in  vital  union  as  in 
these  discourses.     And  here  is  the  secret  of  their  power." 

From  the  Independent,  Nev.'  Tork: 

"So  far  are  these  sermons  from  being  hostile  to  true  Christianity  that  they 
cotutitute  a  most  powerful  defense  of  all  that  is  powerful  and  permanent  in  our 
religion.  •  •  The  American  pulpit  has  sent  forth  few  volumes  of  sermons 
richer  in  thought,  more  devout  in  sentiment,  more  admirable  in  statement, 
or  fairer  in  outward  fashioning,  than  this  volume  of  sermons  of  Mr.  Swing." 

From  the  Adzvnce,  Chicago: 

"  Such  is  the  glow  of  his  rhetoric,  such  the  beauty  of  his  illustrations,  such 
the  generous  tone  of  his  sentiments,  that  the  reader  is  soon  brought  into  admir- 
ing sympathy  with  the  author." 

Sent  by  mail,  post-paid,  on  receipt  of  price  by  the  publishers. 

JANSEN,  McCLURG   &  CO., 

CK  ICAGO. 


This  book  is  DUE  on  the  last  date  stamped  below 


iM^  1  9  \SZk 
APR  Z 6  I93tf 


Form  L-9-15m-7,'32 


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